As the dust settles on Chancellor Rachel Reeves’s autumn budget for 2024, many Britons are left wondering: am I better or worse off? From pensions to income tax to stamp duty, the budget ushered in a raft of changes that could have a significant impact on your personal finances. Let’s break down the key measures and what they mean for your wallet.
Pensioners Get a Boost
In a win for retirees, Reeves confirmed that the triple lock on pensions will deliver a 4.1% increase from April 2025. This means the full new state pension will rise from £221.20 to £230.25 per week – an extra £470.60 per year. The standard minimum guarantee for single pensioners is also set to increase to £227.10, expanding pension credit eligibility to those earning under £11,809 annually.
However, the universal winter fuel allowance has been scrapped and will now only be paid to pension credit recipients, leaving some pensioners out in the cold.
Benefits on the Rise, But Barely
Other state benefits like universal credit will see a meager 1.7% increase, thanks to a drop in inflation. For a single person over 25, that translates to just £6.69 more per month. Child benefit will tick up by a similar margin, with the rate for the first child rising from £25.60 to £ per week.
Carer’s allowance, a point of contention, will inch up by £1.39 per week to £83.29. The earnings limit for carers will also increase by £45.
Income Tax Thresholds Unfreeze, Inheritance Tax Stays Icy
In a bit of good news for earners, income tax thresholds will unfreeze and rise with inflation from April 2028. This means more of your pay rise will end up in your pocket rather than the taxman’s. However, the inheritance tax threshold remains frozen until 2030, potentially ensnaring more estates as property values climb.
Closing Loopholes on Pensions and Property
The wealthy will feel a pinch as the chancellor closes inheritance tax loopholes on pensions and agricultural land. From 2027, unused pension funds left to anyone besides a spouse or civil partner may be subject to the 40% levy. And the longstanding tax exemption on inherited farmland and business property will be capped at £1m from 2026.
Second-Home Buyers, Investors Stung by Stamp Duty Hike
In a bid to help first-time buyers, the stamp duty surcharge on second homes and buy-to-let properties will jump from 3% to 5%. On a £300,000 purchase, that’s an extra £6,000 in tax. The government claims the move will open up 130,000 more transactions to primary residence buyers over five years.
Capital Gains Tax Climbs for Share Investors
Investors cashing in on the stock market will also face higher taxes, with the capital gains tax on shares rising from 20% to 24% for 40% tax rate payers and from 10% to 18% for basic-rate taxpayers. However, the £3,000 annual exempt amount and £20,000 ISA allowance remain unchanged until 2030, preserving some benefit for small-scale investors.
Minimum Wage Workers Get a Raise
Low earners can expect a pay bump in April as the “national minimum wage” rises by a robust 6.7%. A full-time worker over 21 will see their annual salary increase by around £1,400 to £22,222. Younger workers and apprentices will enjoy even more substantial raises on a percentage basis.
Drivers Catch a Break at the Pump
In a surprise move, Reeves opted to maintain the freeze on fuel duty, sparing drivers a potential 7p per litre increase. For the typical 55-litre tank, that’s a savings of £3.85 per fill-up compared to the planned hike.
So there you have it – the key personal finance takeaways from Budget 2024. Whether you’re a pensioner, a working parent, an investor, or a minimum wage earner, there’s likely something in this budget that will impact your bottom line. As always, the devil is in the details, so be sure to consult with a financial advisor to understand exactly how these changes will play out in your unique circumstances. One thing’s for certain: in the coming tax year, we’ll all be keeping a close eye on our wallets.
