Contact Us

The 2024 Autumn Budget: Impacts for People

The 2024 Autumn Budget, announced by Chancellor Rachel Reeves, brings some major changes to personal finances across the UK.

At Double Point, we’ve gone through these updates to show you exactly what they mean for your taxes, pensions, benefits, and investments, so you know what’s coming and how it’ll impact your wallet.

In this guide, we’ll cover the key updates, who they affect, what’s changing, and how these changes could play out for you.

State Pensions Get a Much-Needed Boost

Who it affects: Over 12 million pensioners in the UK, including those on the basic and new state pension, as well as those eligible for the means-tested pension credit.

What the changes are: The government has reaffirmed its commitment to the state pension triple lock, which means the basic and new state pension will increase by the highest of earnings growth, price inflation, or 2.5%. For the 2025-26 tax year, this will result in a 4.1% uplift.

Specifically, the full new state pension will rise from £221.20 to £230.25 per week, an annual boost of £470.60. The standard minimum guarantee for single pensioners will also increase from £218.15 to £227.10 per week.

The impacts: This will provide a much-needed increase to the incomes of millions of retirees, helping to offset the rising cost of living. It’s particularly important given that the universal winter fuel allowance has been scrapped, with payments now only going to those on pension credit.

Preserving the triple lock ensures that state pension payments will keep pace with the highest of the relevant economic indicators, offering vital financial security for older people.

Freezing of Income Tax Thresholds

Who it affects: Taxpayers whose incomes rise above the personal allowance and basic rate thresholds, potentially pushing them into higher tax brackets.

What the changes are: The personal allowance (£12,570) and higher rate threshold (£50,270) will remain frozen until 2028, rather than rising in line with inflation. This represents a departure from the previous government’s plans to extend the freeze further.

The impacts: This ‘fiscal drag’ will mean more people are pushed into paying higher rates of income tax as their wages increase, even if those increases don’t keep up with inflation. For example, someone earning £55,000 per year in 2028 would have paid the higher 40% rate on £4,730 of their income, compared to just £270 if the thresholds had risen with CPI.

While the government argues this is necessary to help repair the public finances, it will undoubtedly put additional strain on household budgets in the short to medium term. Careful tax planning will be essential to minimise the impact.

Changes to Inheritance Tax

Who it affects: Individuals with significant assets, including pensions, farms, and businesses.

What the changes are: From April 2027, unused pension funds will become subject to inheritance tax, closing a loophole that has allowed wealthy individuals to pass on large sums tax-free. The IHT and residence nil-rate bands will also be frozen until 2030.

From April 2026, the current full relief from inheritance tax will only apply to the first £1 million per individual of combined APR- or BPR-qualifying assets. Anything above that £1 million threshold will only receive a 50% rate of relief.

So, in essence, the reforms are reducing the scope of the full 100% relief rate. Instead of being able to apply the 100% relief to all qualifying agricultural or business property assets, there is now a £1 million cap, after which a 50% relief rate will apply.

The impacts: These changes will mean more estates face an inheritance tax liability, as the value of pensions, farms, and businesses continue to rise. Individuals with significant wealth will need to review their estate planning strategies to ensure they are making the most of the available reliefs and exemptions.

For those with farms or business interests, the reduction in the full relief rate could significantly increase the IHT payable on asset values above £1 million, potentially leading to forced sales to cover the tax bill.

Higher Rates for Second Homes and Investment Properties

Who it affects: Individuals purchasing second homes, buy-to-let properties, and businesses acquiring residential property.

What the changes are: The higher rates for additional dwellings (HRAD) surcharge will increase from 3% to 5% from 31 October 2024. Additionally, the single SDLT rate charged on purchases of dwellings over £500,000 by corporate bodies will rise from 15% to 17%.

The impacts: These changes will make it more expensive for investors and second-home buyers to acquire residential properties, with the government aiming to improve the prospects for first-time buyers and owner-occupiers.

For example, the extra 2% HRAD surcharge on a £300,000 second property will result in an additional £6,000 in stamp duty. This could reduce demand from investors and second-home purchasers, potentially freeing up more homes for those looking to buy their primary residence.

Capital Gains Tax Rate Rises

Who it affects: Investors, business owners, and those selling assets such as shares or investment properties.

What the changes are:

  • The lower rate of capital gains tax will increase from 10% to 18%.
  • The higher rate of CGT will rise from 20% to 24%.
  • This brings the CGT rates more in line with the 18% and 24% rates charged on income from residential property.
  • The lifetime allowances for business asset disposal relief (BADR) and investors’ relief (IR) will also be reduced from £10 million to £1 million.

The impact: These changes will mean more investors and business owners face a higher tax bill when realising their gains. Reducing the BADR and IR lifetime allowances will also increase the tax cost for those looking to sell their businesses or qualifying investment assets, potentially affecting succession planning and liquidity events.

Businesses and individuals will need to carefully review their investment portfolios and consider strategies to mitigate the increased CGT burden, such as utilising tax-efficient vehicles like Enterprise Investment Schemes or using the remaining CGT exemption and allowances. Proper tax planning will be essential to minimise the impact of these CGT rate hikes.

Reducing the BADR and IR lifetime allowances will also increase the tax cost for those looking to sell their businesses or qualifying investment assets, potentially affecting succession planning and liquidity events.

Minimum Wage Boost for Low-Paid Workers

Who it affects: Over 3 million low-paid workers, including those aged 18-20.

What the changes are: The National Living Wage will increase by 6.7% to £12.21 per hour from April 2025. The National Minimum Wage for 18 to 20-year-olds will also increase by a substantial 16.3% to £10 per hour.

The impacts: This will boost the annual earnings of full-time minimum wage workers, potentially adding over £1,400 to their salaries. The pay rise for younger workers aged 18-20 could be as much as £2,500 per year.

However, the increased labour costs may lead businesses to pass on higher prices to consumers to maintain profitability. Employers will need to carefully manage their budgets to accommodate the rising wage bill.

Uprating of Working-Age Benefits

Who it affects: 5.7 million families receiving Universal Credit and those claiming other key working-age benefits like child benefit and carer’s allowance.

What the changes are: Most working-age benefits will be uprated by 1.7% in line with the September 2024 Consumer Price Index (CPI) inflation figure. This includes a £6.69 monthly increase to the Universal Credit standard allowance for single people over 25, and a £10.50 rise for couples.

The government has also introduced additional support measures to help the most vulnerable. The carer’s allowance earnings limit has been increased by £45 per week, allowing an estimated 60,000 more carers to access this vital benefit. 

A new “Fair Repayment Rate” also caps the amount deducted from Universal Credit to repay debts at 15% of the standard allowance.

The impacts: While the 1.7% uprating of most benefits may not fully keep pace with the rising cost of living, the targeted support for carers and those in debt will provide a much-needed boost to household finances for some of the most financially stretched individuals and families.

Taking Action: How Double Point Can Help

The 2024 Autumn Budget brings several changes to personal finance that will impact millions nationwide.

Adjustments to tax thresholds, pension rules, and investment allowances can make understanding these updates challenging, and they can seriously impact short and long-term financial planning.

That’s where the team at Double Point can step in and help.

Our team of chartered accountants has extensive experience helping clients plan for retirement, manage investments, and reduce tax liabilities.

We’re here to make sure you’re well-prepared to handle the Budget’s changes, with advice tailored to protect and grow your wealth.

Book a consultation with us to discuss how the Autumn Budget affects your decisions now and in the future.

We’ll provide personalised guidance to support your financial goals so you can make the most of these new opportunities.

Reach out to Double Point today, and let’s secure your financial future together.

Discover how Double Point can help you with a free consultation.

Dedicated Financial Assistance

At Double Point, our chartered accountants' primary focus is facilitating the growth and success of your business.