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Autumn Budget Unpacked: Key Takeaways for Your Finances and Wellbeing


On October 30th 2024, Chancellor Rachel Reeves delivered the Government’s first Autumn Budget Statement, outlining new measures to expand mental health crisis support, reshape healthcare delivery, and address employment services.


Director of BAME Mental Health Support, Alfred Oyekoya, welcomed the government’s commitment to enhancing mental health crisis services and shifting NHS care from hospitals to community-based, preventive care. He noted, however, the importance of backing this vision with necessary resources and workforce, stating, “We now await the publication of the Get Britain Working white paper and further details on the Department for Work and Pensions’ welfare reforms, hoping these will focus on reablement rather than stigma.”


Here, we explore key elements of the budget and how they may impact you, from changes in income, savings, and investments to adjustments in pensions and taxes.



Income

Starting in April next year, the national living wage will increase by 6.7%, from £11.44 to £12.21 an hour. For a full-time worker aged 21 and over, this translates to an additional £1,400 per year. The national minimum wage for 18 to 20-year-olds will also see a rise, moving from £8.60 to £10 an hour—a 16.3% increase.

Income tax and National Insurance thresholds are frozen until 2028, but from that point on, they’ll adjust in line with inflation. This means that as salaries grow with inflation from 2028 onward, fewer individuals will be drawn into higher tax bands.

Employer National Insurance contributions are set to increase from 13.8% to 15% beginning April 6, 2025. Additionally, the threshold for employer National Insurance will decrease from £9,100 to £5,000 per year, which could impact both employers and employees.


Savings and Investments

ISA limits will remain at their current levels until April 2030, allowing a maximum of £20,000 for ISAs, £4,000 for Lifetime ISAs, and £9,000 for Junior ISAs and Child Trust Funds.

Capital Gains Tax rates have increased with immediate effect, rising from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. This change primarily impacts those selling businesses or investments outside of ISAs.

Stamp Duty Land Tax will increase for landlords or homeowners buying additional properties, from 3% to 5% above standard rates, starting on October 31, 2024. The dividend allowance for shares outside ISAs remains unchanged at £500.



Spending and Taxes

Fuel duty will stay at its current levels for another year, and the 5p reduction, introduced in March 2022, will be extended for an additional 12 months. A planned increase in line with inflation for 2025-26 has also been canceled.

A penny will be removed from duty on an average-strength draught pint starting February next year, but duty on other alcohol products will rise with inflation. The government is also extending the bus fare cap scheme, increasing the cap from £2 to £3. This new cap will be in place from January to December 2025.

Private schools will be subject to VAT beginning January 2025 and will lose business rate relief starting in April 2025.


Pensions

The State Pension will increase by 4.1% from April, raising the full new State Pension from £221.20 to £230.25 per week, providing an annual increase of £470.60 for pensioners. However, pensions tax relief and the treatment of tax-free cash remain unchanged.

From April 2027, unused pension funds will be included in an estate for inheritance tax purposes, which could impact families with assets above the inheritance tax threshold.


Inheritance

The inheritance tax threshold freeze will extend from 2028 to 2030. This allows up to £325,000 (and an additional £175,000 if passing on a primary residence to a direct descendant) to be exempt from inheritance tax. As noted in the pensions section, unused pension funds and death benefits will count toward an estate’s total for inheritance tax purposes starting April 6, 2027.These changes reflect significant steps in various areas, from health and welfare reform to personal finances.


At BAME Mental Health Support, we are committed to helping our community understand how these shifts may affect them and advocating for resources that enable accessible, stigma-free support services for all.



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