Autumn Statement 24: What the first Labour Budget in 14 years means for you

On Wednesday 30 October, Chancellor Rachel Reeves delivered the first Labour Budget Statement.

With the past few weeks in the press full of leaks to prepare the nation for significant changes in tax,

spending and benefits, there were few surprises left. The budget is the biggest tax-raising budget

ever, with taxes increasing by £40 billion.

Here, we highlight the main issues for business owners, without political bias.

Overall

This is a budget that raises £40 billion in tax increases. For an SME, there are significant changes.

Increases in wage levels, National Insurance threshold lowering, and percentage of contribution

increasing, all present a challenge for SMEs. Corporation Tax and Business Rate announcements

provide some stability, and commitment to infrastructure and large-scale projects may provide

additional income streams.

Inflation will remain at 2% as per the Bank of England’s target.

Income Tax

The thresholds for income tax will remain the same until 2028 when the thresholds will increase in

line with inflation.

National Insurance

Employers currently pay National Insurance on their workers’ earnings at a rate of 13.8% for those

earning £9,100 and above. From April 2025, the rate will increase to 15%, and the threshold will

drop to £5,000.

Workers pay 8% from the age of 16 and earning more than £242 a week, or have self-employed

profits of more than £12,570 per year. This remains unchanged.

Wages

The National Living Wage will increase in April:

Employees aged 21 and over will see a wage increase to £12.21

Employees 18 – 21 years old will see a wage increase to £10

For employees aged 16 and 17, the national living wage will increase to £7.55

The Apprenticeship rate will increase to £7.55.

Employment Allowance

The allowance will increase from £5,000 to £10,500. This will result in 865, 000 employers not paying

NI next year. This will be in place from April 2025.

Corporation Tax

The main rate of corporation tax, paid by businesses on taxable profits over £250,000, will remain at

25%. The “Corporate Tax Roadmap” has been published.

Business Rates

From 2026, the government will introduce two permanently lower business rates for retail, leisure

and hospitality. The current 75% relief, due to expire in 2025, will be replaced by a 40% relief on

business rates, up to a maximum discount of £110,000.

Capital gains tax (CGT)

CGT is charged on profit from the sale of an asset that has increased in value. This is particularly

associated with property, i.e. the sale of a second home, but also applies to investments.

Currently, the rate varies from 10% to 24% depending on your tax bracket or what the CGT is being

applied to.

The rate of capital gains is increasing from 10% to 18% if you are a lower-rate taxpayer, and 20% to

24% if you are a higher-rate taxpayer.

Property rates remain the same at 18% and 24%.

The Lifetime limit for business asset disposal relief will remain at £1m. The rate of relief will remain

at 10pc this year before rising to 14pc in 2025 and 18pc in 2026.

Inheritance Tax

Inheritance Tax is charged at 40% on anything over £325,000. This threshold will remain the same

until 2030.

It should be noted that whilst the first £325,000 can be inherited tax-free, this increases to £500,000

should it include a residence that is inherited by a direct descendant. This doubles should a surviving

spouse/partner have inherited initially.

Until now, pensions have not been included. This will change I April 2027 with unspent pension pots

also subject to inheritance tax.

From April 2026, the first £1m of combined business and agricultural assets will not incur inheritance

tax, but after that, it will apply at an effective rate of 20pc.

Stamp duty

Under the previous government, a temporary change to stamp duty was introduced, which is due to

expire in March 2025. This makes stamp duty applicable to properties over £250,000 or £450,000 for

first-time buyers. The rate is a scale from 5% to 12%. In March 2025 this will revert to £300,000 for

first-time buyers and £125,000 for home movers.

Stamp duty on properties being purchased as a second home, or investment property, will increase

from 31 October to 5% instead of 3%

Alcohol and Tobacco

There is a new vaping tax being introduced in October 2026 of £2.20 on 10ml of vaping liquid.

In an attempt to support pubs and bars, tax on draught alcohol will be cut by 1.7% whilst non-

draughter will increase by the higher RPI measure. This will be introduced in February 2025.

Non-dom tax status

The “non-dom” status will be abolished from April 2025.

Fuel duty

The 5p cut to fuel duty has been extended to April 2026.

Bus Travel

The £2 cap on single bus fares will rise to £3 from January.

State pension

The state pension is set to rise by 4.1% in April 2025.

VAT on private schools

As already announced, VAT at 20% will be added to private school fees from 1 January 2025.

Energy windfall tax

The windfall tax increased from 38% from 35% on 1 November 2024 and will remain as such until 31

March 2030.

With any budget that aims to raise £40 billion through taxation, there will be pain for many. The flip

side is a commitment to additional spending and reforms for the NHS, homelessness, housing and

education. If you are interested in reading more details, the full statement is available on the Gov.uk

website.

If you have any concerns about your commitments, your business or your financial security, please

do give us a call.