Autumn Budget: What is it, what time it is, and what to expect (Image: PA)
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Chancellor Rachel Reeves is set to deliver the Labour Party’s first Budget in 14 years next week.
Ms Reeves is poised to unveil tax rises and spending cuts to a value of £40billion. After taking office in July, Labour said it had inherited “the worst set of circumstances since the Second World War”, meaning “difficult decisions” lie ahead.
At first, Ms Reeves said she was tasked to fill a £22billion hole in the nation’s finances. However, she recently announced this would only be enough to “keep public services standing still”.
The Treasury is since understood to have identified a far larger £40billion funding gap which Ms Reeves will seek to plug to “protect” key departments from real-term cuts and put the economy on a firmer footing.
Here’s everything you need to know about the upcoming Autumn Budget.
What is the Budget?
The Budget is delivered annually by the Chancellor of the Exchequer, who is responsible for overseeing the Government’s finances.
The Autumn Budget outlines the Government’s upcoming plans for taxes, public spending, and borrowing. It addresses everything from changes to benefit rates and NHS funding to raising and lowering taxes.
The statement also includes a forecast for the economy by the Office for Budget Responsibility (OBR).
This is one of two major fiscal events that take place every year, the other being the Spring Statement. This is usually announced in March.
When is the Autumn Budget?
This year, the Autumn Budget will be announced on Wednesday, October 30.
Ms Reeves will deliver the speech directly after Prime Minister’s Questions (PMQs) at around 12.30pm (GMT). It’s expected to last around one hour. The leader of the opposition, currently Rishi Sunak, will then have the opportunity to respond to what has been announced.
How can I watch the Autumn Budget?
The Autumn Budget will be broadcast live on BBC or BBC iPlayer. There will also be a live stream available on Parliament TV.
What to expect
The Labour Party promised not to raise taxes for “working people” during its election campaign, which if honoured, should mean there will be no rises in income tax, National Insurance, or VAT.
However, there has been increasing speculation on what other areas Ms Reeves may address to plug the apparent £40billion hole in the Government’s finances.
Capital Gains Tax (CGT)
Capital Gains Tax is charged on profits made from selling assets that have increased in value, such as second homes or investments. Higher earners currently pay 24 percent on property gains and 20 percent on profits from other assets like shares. There has been speculation that Ms Reeves may raise the taxation rate.
Some have suggested there could be a rise to 39 percent, however, the Prime Minister has dismissed these suggestions.
Pension taxation
Changes to private pension taxation could include reducing tax-free lump sums.
At present, people can withdraw 25 percent of their pension (up to a limit of £268,275) after they reach 55, tax-free. There has been speculation that Ms Reeves may reduce this limit to £100,000.
Additionally, it’s been mooted that Ms Reeves could be planning to alter tax relief on pension contributions.
Currently, basic rate taxpayers get 20 percent tax relief, while higher earners receive 40 to 45 percent. A flat rate could be introduced, but this now seems unlikely.
Employer National Insurance Contributions (NI)
Employers pay National Insurance (NI) at 13.8 percent on workers’ earnings, and there are reports of a possible increase. Labour’s pledge focused on employee NI contributions, and there have been talks of making companies pay NI on staff pension contributions, a move businesses argue would hinder hiring.
Rachel Reeves has already made a slew of announcements (Image: Getty)
Inheritance Tax (IHT)
The inheritance tax rate is currently set at 40 percent on estates above £325,000. The tax-free allowance threshold has been frozen since 2009, despite rising inflation. Changes to exemptions affecting IHT could be under consideration.
Stamp Duty
People must pay Stamp Duty Land Tax when they purchase a property or land in the UK over a certain price.
In 2022, the threshold for paying Stamp Duty was raised to £250,000, and to £450,000 for first-time buyers, but these higher thresholds are set to revert in March 2025. Labour has not confirmed an extension.
The nil rate threshold is expected to return to the previous level of £125,000. For first-time buyers, the threshold will return to £300,000.
Fuel Duty
Fuel Duty has been frozen for over a decade, with a 5p cut in 2022 due to rising fuel prices. However, some argue that this cut was not passed on, and it may be reversed in the upcoming Budget.
Sin taxes
It’s been mooted that the Government could be set to impose “sin” taxes on products and services deemed harmful to people’s health. These could include gambling, as well as alcohol and smoking.
Non-dom tax status
Non-domiciled (Non-dom) residents don’t pay UK tax on overseas income. A non-dom refers to a UK resident whose permanent home is based outside of the UK.
Labour has proposed toughening plans to abolish non-dom status, although concerns remain that it might generate less revenue than expected.
What’s already been announced?
A few policies have already been announced, and some have garnered some criticism so far.
Winter Fuel
The Winter Fuel Payment is a benefit distributed by the Department for Work and Pensions (DWP) and helps pensioners with heating bills during the winter. It’s worth between £100 and £300 for those who meet the criteria.
The payment was previously available to everyone above the state pension age in the UK. This year, Chancellor Rachel Reeves changed the rules, and only state pensioners on means-tested benefits will qualify.
The move is estimated to affect around 10 million people and is estimated to save public finances around £1.4billion. The decision has been met with widespread criticism and charities have warned some pensioners will be “seriously hit” by the cut.
VAT on private schools
From January 1, private school fees will be taxable at the standard VAT rate of 20 percent.
Pension rate increase
The Labour Government has pledged to honour the state pension triple lock, which sees pensions rise by the largest figure out of inflation, wage growth, or 2.5 percent.
Wage growth increased by four percent in the three months to July, which was the highest figure of this year’s metric. This means state pension rates will rise by four percent in April 2025. The Chancellor will confirm the rate during the Budget.
Energy windfall tax
A windfall tax on oil and gas companies will increase in November and will remain until March 2030. The levy was introduced off the back of rocketing energy company profits.
It will increase from 35 percent to 39 percent on November 1. It will remain at this rate for the next six years unless oil and gas prices drop below a certain level for six months.
