It’s a big day for our pockets – the autumn budget. This is what the Chancellor (Rachel Reeves) has decided for things like taxes and where money is spent.
The main points that might affect your take-home pay, and how much you have left to spend or save are:
- Minimum wage for over 21s to rise from £11.44 to £12.21 per hour (from April). For 18-20 year olds it will increase from £8.60 to £10.
- The freeze on the thresholds of Income Tax and National Insurance will end in 2028, and after that they rise in line with inflation. This means from 2028, you might pay less tax on your income.
- Capital Gains Tax to rise (tax on things like the profit from selling investments), with the lower rate increasing from 10% to 18% and the higher rate to increase from 20% to 24%. Property is not affected as these were already higher.
- Inheritance Tax thresholds to remain in place until 2030 (from 2028), which is £325,000 unless a property is included, which is then £500,000.
- Pensions to now be included for Inheritance Tax from 2027. This could have a huge impact as pensions can often be a person’s largest asset, and would likely mean lots more estates will now pay Inheritance Tax, and their loved ones receive much less (Inheritance Tax is 40% above £325,000).
- National Insurance for employers to increase from 13.8% to 15%, and the limit that this is paid is reduced to £5,000 from £9,100. This is a massive increase and could see larger employers paying considerably more.
- Small businesses may not be impacted by the rise in Employer National Insurance as the employment allowance increases from £5,000 to £10,500 (essentially 0% tax on the first £10,500 of Employer National Insurance.
- Bus fares to rise from £2 to £3 (the cap is increased)
- No change in petrol tax (fuel duty), with the 5p lower rate kept for another year
- Stamp Duty Land Tax on second homes (that also includes buy-to-lets) to increase from 3% to 5% (in England and Northern Ireland).
Overall, this could have been a lot worse than it appears, with no increase in Income Tax or National Insurance through payslips – but these changes will have a huge impact on medium and larger businesses and ultimately that could mean a lower pay rise for you, no bonuses, possibly pay cuts, or things like companies hiring fewer staff.
For pensions, it’s a big deal, with a pension often being a safe place to pass down inheritance, so your family will very likely pay more when you sadly pass away – but there’s no tax changes on tax relief for yourself, so they’re still a great option to save for your future (you won’t pay any tax on what you save, and there’s no tax as it grows).
