As expected, the maiden Budget under the new Labour government was not a quiet affair. It felt rather like three Budgets in one. Several of the many rumoured changes ahead of the event did not come to pass, but some will nonetheless feel this pre-Halloween fiscal event came with more tricks than treats in terms of personal finances.
A positive for investors, and borrowers, is that the Chancellor was able to maintain the confidence of the bond market, whose response can be swift and ruthless if it detects the sums don’t quite add up. Chancellor Reeves will be pleased her briefings resulted in only few market ripples on the day.
Yet keeping markets onside meant increasing investment without raising taxes significantly, and this was always going to be a tall order. With limited headroom, Ms Reeves confirmed tweaks to fiscal rules to free up funds for much needed spending on infrastructure and other projects, and to aim for a more supportive environment for UK growth. This relaxation involves offsetting assets against national debt to allow more money to be invested in the economy.
Consequently, and as widely expected, the tax burden is set to rise for many – and in certain cases in short order. Prior to the Budget, the Chancellor ruled out increasing taxes on ‘working people’, which was widely interpreted to mean rates for income tax, national insurance, VAT and corporation tax would be left alone. This represents about three quarters of the tax base, which limited the options to replenish the Treasury coffers to ensure the Chancellor met her new fiscal directive that day-to-day spending should be covered by tax receipts.
Instead, changes in areas like capital gains tax, inheritance tax, and pensions were on the cards, and that largely proved to be the case – but with a more marginal impact than many feared ahead of the event. There was also a positive surprise as fuel duty was frozen for a further year, something that will help consumer spending power and keep down business costs and inflation.
Autumn Budget summary
Here’s a roundup of the main Budget changes affecting personal finances.

1. Income tax and National Insurance
Despite the government committing not to increase income tax, the burden continues to ramp up via the back door through the stealthy tax collector that is ‘fiscal drag’ . In other words, as incomes rise a progressively larger proportion falls into higher tax bands.
Tax thresholds will remain frozen, as they did under the previous government. But the chill will not persist for as long as feared as the Chancellor confirmed a return to inflationary rises from 2028. There was also good news for lower earners with an inflation busting 6.7% rise in the minimum wage next year from £11.44 to £12.12 an hour.
There was no change to employee or self-employed national insurance contributions, as widely anticipated, but private employers will pay more NI with the current 13.8% rising to 15.0% from next year. In addition, the threshold at which employers start to pay NI for an employee is to fall to £5,000 from £9,100. This is expected to be a significant revenue raiser, but it potentially reduces the competitiveness of UK businesses. It could also lead to bosses in the private sector restricting new hires, limiting pay rises, or scaling back growth plans.
2. Pensions and ISAs
In the weeks before today’s Budget there were several rumours swirling about how the Chancellor might change pension or ISA rules. However, there was very little on either, and with the government poised to undertake a wide review of the retirement saving landscape that is entirely appropriate. It’s vital faith and stability is maintained in the UK’s primary savings and investment vehicles with any changes fully appraised for their potential effects on retirement provision and society more widely.
Importantly, and despite huge amounts of speculation in the run up to the day, there are no changes to pension tax relief, or the ability to take 25% tax free cash from most pensions – up to a maximum of £268,275 from an individual’s combined pots. Nor are there any changes to the pension annual allowance, or to ISA and Junior ISA limits.
Regarding the State Pension, a triple lock rise was confirmed at an inflation-busting 4.1% based on wage rises. This helps make up for the loss of winter fuel payments this November and December. A full New State Pension rises from £11,502 to £11,976 from next April.
While further changes may be coming down the track on pensions pending the government’s review, the big news for now was their future inclusion in the valuation of an estate for inheritance tax purposes. More on that below.
3. Capital Gains Tax (CGT)
Investors and entrepreneurs were braced for changes to the Capital Gains Tax (CGT) regime, either in terms of an increase in the rate of CGT or a curtailment of reliefs relating to business assets. These fears proved well-founded.
Rates of CGT on shares were 10% and 20% for basic and higher rate taxpayers respectively, with those for second properties at 18% and 24%. However, from today the rates applied to shares will be aligned with those on property at 18% and 24%. Remember, gains are added to income when calculating CGT so large taxable gains taken by basic rate taxpayers, or even non-taxpayers, can mostly be at the higher rate.
Business owners have more generous CGT treatment, paying a rate of 10% on the sale of an eligible business (up to a lifetime limit of £1m) by claiming Business Asset Disposal Relief. However, the regime is set to become less favourable as the reduced rate of tax is now set to rise to 14% from 6 April 2025 and will match the main lower rate of 18% from 6 April 2026. This could accelerate business sales over the coming months as owners look to offload their companies while the lower tax burden persists.
4. Inheritance Tax
Changes to inheritance tax (IHT) were also the subject of significant speculation ahead of the Budget. With the ‘baby boomer’ accumulation of wealth increasingly being passed to the next generation inheritance tax and gifting rules were, inevitably, in the Chancellor’s crosshairs.
The Chancellor has previously criticised what she regards as wealthy people using loopholes to avoid IHT. As such, it wasn’t a huge surprise to see planned reform to reliefs used by land and business owners. Exemptions on business property and agricultural land are to be capped at £1m with a lower 50% relief thereafter from April 2026. Qualifying assets within the limit can still be passed on inheritance tax free provided they have been owned for at least two years at the time of death. The changes will be a concern for family businesses and larger estates passed through the generations, who will now face large tax bills. From a family business perspective, more companies could be passed on at an earlier juncture.
Meanwhile, AIM shares will only receive a 50% business relief reduction with no 100% rate below £1m. This effectively set the inheritance tax rate at 20% for eligible AIM shares and, consequently, it is very important that IHT planning strategies are reviewed. The curtailment of IHT relief is a disappointment to smaller and innovative companies that could look to AIM to raise investment capital as the watered-down relief will likely reduce the pool of capital available. However, there is now at least some certainty after weeks of speculation that relief could be withdrawn altogether.
Elsewhere, it was announced that unused pension pots will be included in the valuation of an estate from April 2027. Reform in this area has significant implications. Most obviously it draws lots more people into the inheritance tax net. It could also see people opting to draw down from pension pots faster to make gifts if they are affected by inheritance tax limits. For others it may increase the relative attraction of annuities as a source of retirement income as the death benefits of drawdown are watered down.
Overall, changes to IHT call for earlier planning and extra thought around the use of gifting allowances, notably gifts out of ‘excess income’. At present, wealthy individuals can make unlimited gifts free of IHT if these are made on a regular basis and do not affect the giver’s standard of living, but meticulous record keeping is essential.
5. Property
There is to be a higher stamp duty rate on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property of 5% from 31 October 2024 – rising from 3%.
As previously scheduled, the lowering of the first-time buyer nil-rate stamp duty threshold from £425,000 to £300,000 will take place from April 2025, and for non-first-time buyers there’s a reduction of the threshold from £250,000 to £125,000. This was widely expected as Labour had not committed to make the increases to the thresholds under the previous Conservative government permanent.
We will be providing further, more detailed updates on the consequences of the Budget for personal finances in the coming days. However, if you are concerned about how any changes might affect you then speak to one of our financial coaches. They can offer insights and understanding of your situation and outline the options for professional advice if required.
Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.
Post-Budget webinar: Pensions, tax and your money
Following Rachel Reeves' Autumn Budget, our panel of experts round up the key takeaways, outlining which areas of your personal finance are likely to be affected.
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