Rachel Reeves presented Labour’s first budget in almost 15 years on Wednesday, bringing in £40bn of tax rises and promising to spur growth in the UK.
The budget was sweeping in its changes with over £70bn of investment and numerous changes to taxes. The biggest money raiser was the hiking to 15% for employer national insurance contributions, expected to raise over £20bn.
The chancellor has defended the tax rises as necessary to plug funding gaps she claims were left by the Conservatives, but she also admitted the tax hike will likely lower pay rises for employees in the future.
But beyond the headline tax raise Reeves announced numerous small and large changes to the way the UK functions, here Yahoo News lays out some of the biggest changes you should be aware of.
Read the full breakdown below or click to skip ahead
> Lower pay rises likely due to Budget tax rises, Reeves admits
> Stamp duty rise: how much do homebuyers have to pay now?
> Martin Lewis: Lack of child benefit reform bad for single parents
> Mortgage rates to rise after Budget, says OBR
> What the budget means for your pension
> Rachel Reeves’s budget claims fact-checked
Lower pay rises likely due to Budget tax rises, Reeves admits
Tax rises in the Budget are likely to hit workers in the pocket with lower pay rises, Rachel Reeves has admitted.
The chancellor acknowledged her decision to raise national insurance contributions (NIC) for employers could impact wage growth for private sector workers, or companies will have to absorb costs.
Reeves also said she did not want to repeat the £40 billion tax rises she implemented in her first Budget “ever again”. Choices made by Reeves will see the overall tax burden reach a record 38.3% of gross domestic product (GDP) in 2027-28, the highest since 1948.
Stamp duty rise: how much do homebuyers have to pay now?
Labour had been urged to consider freezing stamp duty tax at current discounted rates but Ms Reeves has decided against this as part of her plan to raise £40bn in tax hikes.
Stamp duty thresholds — the levels at which buyers start to pay the property purchase tax — will drop in spring 2025, while second home purchases will incur the new, higher surcharge from 31 October 2024.
“Second home buyers are already responding to last year’s Budget which allowed councils to charge double council tax for second homes,” said Richard Donnell, Head of Research at Zoopla.
Martin Lewis: Lack of child benefit reform bad for single parents
Child benefit will continue to be based on individual income rather than household income, meaning anyone earning £60,000 or more before tax each year must pay a high-income charge above that threshold.
Parents claimed it could even restrict people’s career choices because they wanted to stay under the earnings limit. Mr Lewis wrote on social media: “This is a shame and leaves inequity rife, bad news for single parent and single-earner families.”
Mortgage rates to rise after Budget, says OBR
Mortgage rates will rise … after Rachel Reeves tax, borrow and spend Budget, according to the official forecaster.
Detailed analysis by the Office for Budget Responsibility showed it now expects mortgage rates to be higher than its predictions in the spring. The 198-page analysis by the OBR states: “Average interest rates on the stock of mortgages are expected to rise from around 3.7 per cent in 2024 to a peak of 4½ per cent in 2027, then remain around that level until the end of the forecast.”
What the budget means for your pension
The dust is settling on the autumn budget, an event that promised to bring major changes to the pensions industry. Areas such as the amount of tax-free cash you can take from a pension and the tax relief given on pension contributions are always touted as candidates for reform, but the rumours ran red hot this year.
On the one hand, we saw people rush to top up their SIPPs to avoid any moves to slash higher and additional rate tax relief on pensions — this is something that can really help build people’s financial resilience.
However, the industry also saw heightened interest in taking tax-free cash from pensions amid rumours it could be in the chancellor’s sights.
This is something that could undermine people’s financial planning by moving it from the tax-efficient environment of a pension into another vehicle where it may be subject to the likes of capital gains or dividend tax.
In the end, neither of these rumours came to pass, which has been greeted with widespread relief.