How the UK 2024 budget will affect you
Chancellor Rachel Reeves unveiled Labour’s inaugural budget on 30th October. With the economy in a delicate balance, many of us are keen to understand how these fiscal decisions will impact our wallets. Here’s a breakdown of how the budget will affect you and your money.
If you are on low wages:
Starting in April, employers across the UK will be required to pay higher minimum wages. The National Living Wage for employees aged 21 and over will increase from £11.44 to £12.21 per hour.
For those aged 18 to 20, the National Minimum Wage will rise from £8.60 to £10 per hour, while the minimum wage for 16–17-year-olds will go up from £6.40 to £7.55 per hour. Additionally, the apprentice rate for eligible apprentices under 19, or those over 19 in their first year, will also increase from £6.40 to £7.55 per hour.
If you are looking to buy your first home:
There was no announcement about extending the temporary increase in the nil-rate stamp duty threshold.
This threshold, which was raised from £125,000 to £250,000 in September 2022, allowed buyers to pay no stamp duty on the first £250,000 of a property’s price.
On 1 April 2025, the threshold will revert to its previous level of £125,000.
This change means that buyers will have to pay stamp duty on any amount over £125,000, potentially increasing the cost of purchasing a home. First-time buyers will be exempt from stamp duty up to £300,000 as long as the total property price is no more than £500,000.
Our personal finance expert says
"In the last 12 months, 21.5% of first-time buyers enquiring about mortgages on MoneySuperMarket have benefitted from the extended ‘nil-rate’ stamp duty threshold introduced in September 2022.
As the Chancellor of the Exchequer, Rachel Reeves, has not extended this exemption in today’s Budget, more first-time buyers will have to find an average of £4,678 to afford stamp duty from March 31st 2025.
This is on top of saving for a deposit, which the latest MoneySuperMarket Household Money Index reveals takes the average earner, saving every penny of their disposable income, six years to save.
If you’re also going to have to pay stamp duty, it’s more important than ever to make sure your savings are earning the best possible interest rate. Our guide for first-time buyers and mortgage comparison tool can help you to work out how much you’ll need to save to get on the property ladder."
The government will also be adding £500 million to the Affordable Homes Programme in 2025-26 with the intention to build 1.5 million more social and affordable homes.
If you smoke or drink alcohol:
The tax on tobacco products will rise by 2% above inflation, with hand-rolling tobacco seeing a 10% increase above inflation.
Additionally, the tax on non-draught alcoholic drinks will go up in line with the higher Retail Price Index (RPI) measure of inflation, while the tax on draught drinks will be reduced by 1.7%.
These changes mean higher costs for tobacco and non-draught alcoholic drinks, while draught drinks might become slightly cheaper.
Starting in October 2026, a flat rate of duty will be imposed on all vaping liquids. This means an increase of £2.20 per 10ml of vape liquid.
Vapers will also need to prepare for potential price increases in the future.
If you are a driver:
Fuel duty, which has been frozen since 2011, will remain unchanged, and the 5p-a-litre fuel duty cut will also be extended.
This means that the tax on petrol and diesel will remain unchanged, as it has been since 2011.
This helps keep fuel prices more stable and prevents them from rising due to increased taxes.
The government is also planning to increase funding for local roads maintenance in 2024-25 by £500m to fix an additional 1million potholes.
Maintaining tax incentives to purchase electric cars through Vehicle Excise Duty First Year Rates and the Company Car Tax regimes, as well as by extending 100% First Year Allowances for electric cars and chargepoints for a further year.
If you travel by bus:
In 2025, the cap on single bus fares for many routes in England will increase from £2 to £3. However, single bus fares in London will stay at £1.75 and in Greater Manchester at £2, due to different funding arrangements in these cities.
If you are a renter or a landlord:
Stamp duty on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property, will rise from 3% to 5% on October 31.
For landlords, the increase in stamp duty from 3% to 5% on second homes, buy-to-let properties, and residential properties purchased by companies means higher upfront costs when acquiring new properties.
As a result, some landlords might decide against expanding their property portfolios.
If the supply of rental properties decreases, it could lead to higher rents for tenants in the remaining homes.
If you have a mobile phone or broadband contract:
The Chancellor confirmed that she would commit “over £500m of funding next year” for “improving reliable fast broadband and mobile coverage across our country, including in rural areas.”
The rollout has been challenging, from the blacklisting of Huawei 5G technologies to struggles with planning regulation. This comes as many networks are turning off 3G coverage.
Our personal finance expert says
"The Chancellor’s announcement to invest is over £500m of funding next year for improving reliable fast broadband and mobile coverage across our country is great news.
Many of us are spending our hard-earned money on 5G-capable mobile phones but experiencing poorer service due to the incomplete rollout of 5G infrastructure.
But mobile signal is no longer a luxury for many Brits; it’s an essential need.
With the rise of remote work, reliable connectivity is crucial for staying productive when away from the office. For those with children and elderly relatives, a reliable mobile signal is vital for real-time location sharing, access to necessary services such as contactless payments and essential services such as navigation, real-time updates on public transport, and access to digital boarding passes and tickets.
If you’re looking to take out a new phone contract and are concerned about signal, the best thing to do is use the coverage checkers on Ofcom’s website. Check home, work and your commuting route to ensure you will have sufficient signal.”
MoneySuperMarket’s Internet Accessibility Index revealed that the UK has the world’s 32nd fastest broadband speed, averaging 29.6 Mbps. The study also found that the UK also lags in affordability – 17th in the world – meaning we have the 47th best value-for-money internet.
Our experts advise that you should think about how much data you and your family use when choosing a fibre broadband package. Check your bill information, it should tell you how much you use monthly. You can then see how much you use, so pick the cheapest package that works for you.
Check if you can get fibre broadband in your area, how to fix slow internet and our guide to rural broadband.
If you own a business:
The Chancellor announced a raise in the amount of National Insurance (NI) employers pay for their staff and lower the threshold of when they start paying.
Currently employers pay 13.8% of an employee's salary once they start earning more than £9,096 a year, and self-employed workers pay National Insurance on any profits over £12,750. They pay 6% on profits between £12,750 and £50,270 and 2% on profits above that.
Under the new changes, employment allowance - which allows companies to reduce their NI liability - will increase from £5,000 to £10,500.
Tax paid by private equity managers on share of profits from successful deals will also rise from up to 28% to up to 32% from April 2025.
The main rate of corporation tax, paid by businesses on taxable profits over £250,000, will stay at 25% until the next election.
If you travel by plane:
From 2026-2027 all air passenger duty rates will increase.
For passengers on standard economy flights, air passenger duty will be increasing to £1 more for those taking domestic flights in economy class, £2 more for those flying to short-haul destinations in economy class, £12 for long-haul destinations.
But for larger private jet passengers, air passenger duty will increase by an additional 50% - or £450 per passenger.
If you are a saver:
Savers were largely overlooked in the latest budget with no specific measures announced to directly benefit savers, such as changes to savings rates or new incentives for saving.
This means that the annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030.
Our personal finance expert says
"In the cost-of-living crisis it’s more important than ever to get a return on your cash, so it is unsurprising that savers will feel disappointed with the Chancellor’s Budget.
The best interest rates can be obtained by locking your cash in a fixed savings account. However, if you don’t feel like you can lock your money away, you can opt for an easy access account and the good news is those rates have risen too. You can compare fixed and instant access accounts in one easy place on MoneySuperMarket.
Make sure to check the provider is part of the Financial Services Compensation Scheme so savings of up to £85,000 are protected if anything happens. All the providers available through MoneySuperMarket are registered with the FSCS.”
If you are worried about Inheritance Tax or Capital Gains Tax:
The threshold for Inheritance Tax (IHT), currently paid at a rate of 40%, remains at £325,000 until 2030, but from April 2027, inherited pensions will be included in the taxable estate.
This could bring more estates into the IHT net, potentially affecting 8% of estates.
Starting April 2026, previously exempt assets like farms and family businesses will face tax on amounts over £1 million. This could impact those inheriting such properties, requiring them to pay more in taxes.
The rates for Capital Gains Tax (CGT) will increase from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers.
This means higher taxes on profits from selling assets like second homes or investments, which could affect investment decisions and financial planning.