Autumn Budget 2024: Major Tax Cuts and Economic Boosts Announced

The Autumn Budget 2024, delivered by Chancellor Rachel Reeves, unveiled significant tax measures aimed at supporting families and stimulating economic growth. The budget focuses on tax cuts, increased public spending, and measures to enhance investment and innovation across the UK.

Key Takeaways

• National Insurance thresholds raised to £12,570, benefiting nearly 30 million workers.

• Fuel duty cut by 5p per litre for one year, providing relief to drivers.

• Basic rate of income tax to be reduced by 1p in 2024, the first cut in 16 years.

• Increased Employment Allowance to support small businesses.

Economic Context

The UK economy has shown signs of recovery following a mild recession in late 2023. GDP growth in the first half of 2024 was the fastest in two years, supported by lower inflation and rising wages. The consumer prices index (CPI) recorded a year-on-year increase of just 1.7% as of September 2024, the lowest since April 2021.

Tax Measures Announced

The Chancellor's budget included several key tax changes:

1. National Insurance Contributions (NICs): Starting from July 2024, the threshold for NICs will rise to £12,570, allowing workers to retain more of their earnings.

2. Fuel Duty: A temporary cut of 5p per litre on petrol and diesel will be implemented, aimed at alleviating the financial burden on families.

3. Income Tax: The basic rate of income tax will decrease from 20p to 19p in 2024, marking the first reduction in over a decade.

4. Employment Allowance: The allowance for small businesses will increase by £1,000, benefiting around half a million firms.

Public Spending Increases

The budget also outlined plans for increased public spending:

• An additional £500 million for the Household Support Fund, doubling its total to £1 billion.

• Significant investments in public services, including healthcare and infrastructure projects.

• A commitment to improve research and development (R&D) tax reliefs to encourage innovation.

Business Support Initiatives

To foster a conducive environment for businesses, the budget introduced several initiatives:

• Business Rates Relief: New reliefs for green technologies will be implemented, saving businesses over £200 million in the next five years.

• Investment in Training: The government will explore tax incentives to encourage businesses to invest in employee training, addressing the skills gap in the UK workforce.

Political Reactions

The budget has elicited mixed reactions from political leaders and economic analysts:

• Chancellor Rachel Reeves described the budget as a means to restore stability and support working families.

• Opposition leader Rishi Sunak critiqued the budget for increasing borrowing and failing to deliver on promises made to the public.

• Economic think tanks expressed concerns about the long-term implications of increased taxation and public spending on economic growth.

Conclusion

The Autumn Budget 2024 aims to provide immediate relief to families while laying the groundwork for future economic growth. With significant tax cuts and increased public spending, the government seeks to address the cost of living crisis and stimulate investment in the UK economy.

Sources

• GOV.UK, GOV.UK.

• Autumn budget 2024: Key announcements and analysis - House of Lords Library, House of Lords Library.