Autumn Budget 2024
Rachel Reeves, Chancellor of Exchequer has delivered today the Autumn Budget for 2024. Below is our summary:
State Pension
Triple Lock on State Pensions will be maintained by the government for the duration this Parliament. The new and basic State Pensions will rise by 4.1% in April 2025 in line with the earnings growth. This means that over 12 million pensioners in 2025-26 will receive an increase of up to PS470.
Allowances for personal tax
The freeze of NI and income tax thresholds continues. The freeze will be lifted by the Chancellor in 2028. This means, however, that the so-called ‘fiscal pull’ will continue until 2028 to push some individuals up into higher tax brackets with only inflationary increases in pay.
ISA allowance
The ISA allowance will not change until April 2030.
Jonathan Watts-Lay comments: “It’s great news that the State Pension Triple Lock was maintained. Retirees will benefit from the highest of wage inflation, CPI, or 2.5%. The income tax thresholds will remain frozen until 2028, but many people will still be in higher tax brackets. The ISA allowance was also maintained, allowing people the opportunity to save as much money as possible in a tax-efficient way .”
Capital Gains Tax
The announcement was made that the Capital Gains Tax will be increased. Capital Gains Tax (CGT) will increase from 10% to 18.0% and from 20% to 24.0% respectively, as of 30 October 2024.
Jonathan Watts-Lay says: “It is really important that employees use all of their allowances in order to be as efficient with taxes as possible.” It can be confusing to many people, so it’s important that this is explained in a financial wellness programme so they can keep as much of their money as possible. It is especially important for those that may benefit from Save As You Earn plans, as the CGT threshold was reduced in the past couple of years to PS3,000. We also have an increased rate of tax. This is a double-hit! Employers can help protect their employees by putting into place workplace savings vehicles like a workplace ISA, which allows for the transfer of maturing shares as specie without having to convert them to cash. This ensures that up to PS20k is transferred without a tax penalty to an ISA. “Once the money is in an ISA, there is no CGT on stock market gains. There is also no tax on dividends and interest.”
Inheritance Tax
The threshold for inheritance tax will be frozen until 2030. The inheritance tax threshold will remain frozen until 2030.
Jonathan Watt-Lay says: “Whatever the future holds, it is important that individuals have a well thought-out retirement plan which includes all types of retirement income, not just pensions. Many workplaces offer support to their employees to help them understand their options as they approach and reach retirement. This includes financial education, guidance and investment advice when appropriate.
Jonathan Watt-Lay says: “One thing not mentioned in Budget was the planned reduction of the stamp duty threshold in March 2025. This means that home movers and first-time buyers will both pay stamp duties on properties exceeding PS125k. (currently PS250k). The tax increase will be significant for some .”
The first time Autumn budget 2024 appeared was on Human Resources News.
