What Does the 2024 Budget Mean to You

The UK Autumn Budget 2024 introduced by Chancellor Rachel Reeves contains several significant changes impacting pensions, taxes, and household support measures:

• State Pension: The triple lock on pensions remains, leading to a 4.1% rise in state pension payments from April 2024. This increase raises the full new state pension from £221.20 to £230.25 weekly, providing an additional £470.60 yearly to pensioners. Similarly, the minimum guarantee for single pensioners increases from £218.15 to £227.10 weekly. This adjustment offers greater support for low-income retirees, especially critical now that the universal winter fuel allowance is discontinued except for pension credit recipients.

• Other Benefits: Benefits such as Universal Credit will increase by 1.7%, reflecting the recent dip in inflation. The monthly standard allowance for single adults over 25 rises by £6.69 to £400.14, while couples receive an increase of £10.50. Child benefits will also rise slightly, with an additional £0.40 per week for the first child. The carer’s allowance increases by £1.39 weekly, alongside a raised earnings limit for carers by £45, allowing them to earn more without losing benefits.

• Income Tax Thresholds: Previously frozen income tax thresholds will rise with inflation from 2028, reducing “fiscal drag,” which currently pushes individuals into higher tax brackets as wages grow. While this change won’t take effect immediately, it will allow more take-home pay from future salary increases.

• Inheritance Tax (IHT): The budget includes new inheritance tax applications on pensions. From April 2027, pension funds left to non-spousal beneficiaries could incur a 40% tax on amounts over £325,000. Agricultural land and business property, historically exempt from IHT, will face partial taxation above £1 million from April 2026.

• Stamp Duty Increase on Second Homes: The higher-rate surcharge for buying additional properties rises from 3% to 5%. This aims to level the housing market by reducing competition for first-time buyers.

• Capital Gains Tax (CGT): Tax rates on gains from shares have risen immediately, from 20% to 24% for higher-rate taxpayers and from 10% to 18% for basic-rate taxpayers.

• Minimum Wage: From April 2024, the minimum wage for those aged 21 and over will increase by 6.7%, setting it at £12.21 hourly. Younger workers and apprentices will also see wage boosts.

• Fuel Duty Freeze: In a surprising move, fuel duty remains frozen, saving drivers from a 7p per liter price increase.