Guidance

Autumn Budget 2024 - GAD Technical Bulletin

Published 1 November 2024

The Chancellor of the Exchequer presented her Autumn Budget 2024 to Parliament on 30 October.

The Budget is entitled ‘Fixing the foundations to deliver change’ and it states that this is to be achieved “by protecting working people, fixing the NHS and rebuilding Britain.” This bulletin focuses on a selection of the Budget measures most closely linked to GAD’s work.

1. National Insurance and personal tax

Basic, higher and additional rates of income tax, employee National Insurance contributions and the rate of VAT are not being increased at this Budget.

The government will not extend the freeze to income tax and National Insurance contributions thresholds. From April 2028, these personal tax thresholds will be uprated in line with inflation.

The government is increasing the rate of employer Class 1 National Insurance contribution rates from 13.8% to 15.0%. It is also reducing the per-employee threshold at which employers become liable to pay National Insurance (the Secondary Threshold) from 6 April 2025 from £9,100 to £5,000 a year. To support small businesses with these changes, the government is increasing the Employment Allowance from £5,000 to £10,500 and removing the £100,000 threshold, expanding this to all eligible employers.

The Starting Rate for Savings will be retained at £5,000 for 2025 to 2026, allowing individuals receiving less than £17,570 in employment or pensions income to receive up to £5,000 a year of savings income tax-free.

The main rates of Capital Gains Tax that apply to assets other than residential property and carried interest, are increasing to 18% and 24% (from 10% and 20% respectively) for disposals made on or after 30 October 2024.

2. Pensions and benefits

The government will maintain the State Pension Triple Lock for the duration of this parliament. The basic and new State Pension will increase by 4.1% from April 2025, in line with earnings growth (the highest of the three measures under Triple Lock this year). The Pension Credit Standard Minimum Guarantee will also increase by 4.1% from April 2025.

The government will uprate working age benefits by 1.7% from April 2025 (in line with September 2024 CPI).

From April 2025 the National Living Wage (NLW) will increase from £11.44 to £12.21 per hour for all eligible employees, and the National Minimum Wage for 18 to 20-year-olds will increase from £8.60 to £10.00 per hour for all eligible workers. The government is also increasing the minimum wages for under-18s and Apprentices from £6.40 to £7.55 per hour.

The Carer’s Allowance Weekly Earnings Limit will rise to the equivalent of 16 hours at the NLW from April 2025.

The government will transfer the Investment Reserve Fund in the Mineworkers’ Pension Scheme to the scheme’s Trustees. This will be paid out as an additional pension to members of the scheme. The government will also take forward a review of the existing surplus sharing arrangements.

The government will require scheme administrators of registered pension schemes to be UK resident from 6 April 2026.

The government has removed the exclusion from the Overseas Transfer Charge for transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) in the European Economic Area (EEA) or Gibraltar to address the risk of individuals receiving double tax-free allowances. The government will bring in line the conditions of Overseas Pension Schemes and Recognised Overseas Pension Schemes established in the EEA with those established in the rest of the world from 6 April 2025.

The government is making a number of changes to the inheritance tax system. This includes bringing most unused pension funds and death benefits into the scope of inheritance tax from April 2027. This includes death benefits payable from defined benefit pension schemes being brought into scope (whether or not a beneficiary is chosen at the trustees’ discretion). A consultation has been launched to seek views on the processes required to implement these changes.

No announcement was made relating to the reform of pensions provision. Earlier in the year, the government launched a pensions review to unlock greater investment in UK growth assets from pension funds. The terms of reference for Phase one of the review were published in August and a Call for Evidence was published in September, the outcome of which is still awaited.

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3. Fiscal rules and forecasts

The government has introduced a new fiscal framework. The fiscal rules within this framework are the stability rule and the investment rule. The investment rule is to reduce debt, measured as public sector net financial liabilities (PSNFL), as a share of the economy. This rule differs from the measure previously used, public sector net debt (PSND), by allowing for illiquid financial assets, other financial liabilities and funded public sector pension liabilities.

The Office for Budget Responsibility published its October 2024 Economic and fiscal outlook alongside the Autumn Budget. This sets out its central forecasts and associated uncertainties for the 5-year period to 2025-30, taking account of recent data and Government policies announced up to and including the Autumn Budget 2024.

4. Compensation

4.1 Horizon IT scandal

Around £1.8 billion has been set aside for costs from 2024 to 2025 to pay to the victims of the Horizon IT Scandal as quickly as possible.

4.2 Infected blood scandal

The Budget includes £11.8 billion of funding committed to the end of the Parliament to make compensation payments to the victims of the infected blood scandal. A small number of payments are expected to be processed this year, scaling up in 2025.

5. Public services

Through Phase 1 of Spending Review 2025 the government is resetting public spending for 2024 to 2025 and setting departmental budgets for 2025 to 2026. Phase 2 will set out long-term plans for investing in improving public services and achieving value for money for taxpayers, and will conclude in late spring 2025.

5.1 Specific funding boosts to departments include:

• Department of Health and Social Care: resource spending will increase by £22.6 billion in 2025 to 2026

• Ministry of Housing, Communities and Local Government: £5 billion allocation for housing investment in 2025 to 2026

• Department for Education: £6.7 billion of capital funding in 2025 to 2026 for education in England

• Ministry of Defence: £2.9 billion of additional total funding in 2025 to 2026 (compared to 2024 to 2025)

• Department for Transport: £1.2 billion of additional total funding in 2025 to 2026 (compared to 2024 to 2025) to support increased investment in local roads maintenance and local transport

• Department for Energy Security and Net Zero: Increased funding including for clean energy project development and carbon capture storage.

5.2 Investments in the workforce include:

• supporting recruitment of 6,500 new teachers in England, through increases to the core schools budget of £2.3 billion

• deliver the commitment to deliver 13,000 neighbourhood police and PCSOs

• taking forward work to deliver a Civil Service workforce plan and underpinning reform proposals for a more efficient and effective Civil Service, including bold options to improve skills, harness digital technology and drive better outcomes for public services

• recruiting an additional 5,000 compliance staff and providing funding for 1,800 debt management staff

• minimum £500 million additional investment across prisons and probation in 2025 to 2026 to recruit thousands of new prison and probation staff, keeping prisons safe and managing offenders in the community

6. Investment

• The government has created the National Wealth Fund to catalyse over £70 billion of private investment. This will mobilise investment into the UK’s clean energy and growth industries and support the delivery of the Industrial Strategy.

• New nuclear will play an important role in helping the UK achieve energy security and clean power, while securing thousands of good, skilled jobs. This settlement provides £2.7 billion of funding to continue Sizewell C’s development through 2025 to 2026.

• Establishing Great British Energy with £125 million in 2025 to 2026 to deliver on the first steps of the clean energy superpower mission.

• The government will support local authority services through a real terms increase in core local government spending power of around 3.2%, including at least £600 million of new grant funding to support social care.

• Over £1 billion allocated across 2024 to 2025 and 2025 to 2026 for the British Business Bank to enhance access to finance for small businesses, including over £250 million each year for small business loans programmes.

7. Conclusion

The Autumn Budget 2024 delivered a wide range of announcements and plenty of accompanying documentation. While we hope the topics covered in this bulletin are of interest, they do not represent a comprehensive summary of the government’s proposals.

Further information is available on HM Treasury’s website, under the Autumn Budget 2024 section. Please speak to your GAD contact if you have any questions about how the Autumn Budget might impact your work.