Almost four months after Labour won the general election, chancellor Rachel Reeves has delivered her 2024 Autumn Budget, outlining the government’s plans for this tax year and beyond.

Arguing that the July general election had given Labour a “mandate to restore stability and start a decade of renewal”, Reeves described it as “a Budget to fix the foundations and deliver change”.

Against a backdrop of a manifesto pledge not to increase Income Tax, employee National Insurance, or VAT, Reeves also announced that her Budget would raise taxes by £40 billion, stating that any other chancellor would “face the same reality”.

Read on for a summary of some of the key measures and announcements from this year’s Autumn Budget – the first ever delivered by a woman – and what they might mean for you.

Extra investment in infrastructure

The chancellor argued that “the only way to drive economic growth is to invest, invest, invest.”

In the run-up to the Budget, Reeves announced she was making a technical change to the way debt is measured, which will allow the government to fund extra investment. This wider debt measure will allow for more borrowing to invest in big building projects such as roads, railways, and hospitals.

It’s important to note that this additional room for manoeuvre for spending on investment projects will not be used to support day-to-day spending, as the chancellor has committed to fund that with tax receipts.

A rise in employer National Insurance contributions

As many analysts had predicted, Reeves increased employer National Insurance (NI) rates by 1.2% from 13.8% to 15%, effective 6 April 2025.

Currently, employers pay NI only above a threshold of £9,100 a year. The chancellor reduced this threshold to £5,000 a year, effective 6 April 2025. The threshold will remain at £5,000 until 6 April 2028 and then increase in line with the Consumer Prices Index (CPI) thereafter.

These reforms will raise £25 billion a year by the end of the forecast period (2029/30).

At the same time, the government is increasing the Employment Allowance.

The current Employment Allowance gives employers with NI bills of £100,000 or less a discount of £5,000 on their employer NI bill.

From 2025, the Employment Allowance will rise to £10,500. Moreover, the government will expand the Employment Allowance by removing the £100,000 eligibility threshold so that all eligible employers now benefit.

Taken together, the government says that 865,000 businesses will pay no NI contributions at all, and more than half of employers with NI liabilities will either see no change or will gain overall next year.

An end to the freeze on Income Tax thresholds from 2028

Back in 2021, the then-chancellor, Rishi Sunak, raised both the Personal Allowance and the threshold at which higher-rate Income Tax is due by £70 and £270 respectively.

Importantly, however, he also fixed these thresholds until 2026. Then, in the 2022 Autumn Statement, Jeremy Hunt extended this freeze until 2028.

Unexpectedly, Reeves decided against extending the freeze beyond 2028. From 2028/29, personal tax thresholds will be uprated in line with inflation once again.

Capital Gains Tax reforms

The chancellor announced several changes to the Capital Gains Tax (CGT) regime.

Firstly, as of 30 October, the main rates of CGT have increased. The basic rate has risen from 10% to 18% and the higher rate has increased from 20% to 24%.

The government will maintain the lifetime limit for Business Asset Disposal Relief (BADR) – formerly Entrepreneurs’ Relief – at £1 million. Meanwhile, the lifetime limit for Investors’ Relief (IR) will be reduced from £10 million to £1 million.

The BADR and IR rate of CGT will continue to be charged at 10%, before rising to 14% on 6 April 2025 and 18% on 6 April 2026.

These measures will raise £2.5 billion a year by the end of the forecast period.

Furthermore, CGT on carried interest – paid by private equity managers – will rise from 18% (basic rate) and 28% (higher rate) to 32% from 6 April 2025. There will be further reforms from April 2026 to bring carried interest within the Income Tax framework, under bespoke rules.

Changes to some Inheritance Tax reliefs

As expected, the chancellor made key announcements that could affect estate planning.

Nil-rate bands

The freeze on IHT thresholds will be extended by an additional two years, to 2030. The nil-rate band and residence nil-rate band will remain at £325,000 and £175,000 respectively.

Pensions

Reeves announced she was closing the “loophole” that gives pensions preferable IHT treatment. She will bring unused pension funds and death benefits payable from a pension into a person’s estate for IHT purposes from 6 April 2027.

The government estimates this measure will affect around 8% of estates each year.

Agricultural Property Relief

Currently, individuals can claim up to 100% relief on agricultural property (land or pasture that is used to grow crops or rear animals).

From 6 April 2026, the first £1 million of combined business and agricultural assets will continue to attract no IHT at all. However, for assets above this threshold, IHT will apply with 50% relief.

Business Property Relief

From 6 April 2026, the government will also reduce the rate of Business Property Relief from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchange, such as the AIM.

ISA subscription limits frozen until 2030

Prior to the Budget, there was speculation that the chancellor may make changes to simplify the ISA regime.

While these did not materialise, the Budget did confirm that 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.

Additionally, the starting rate for savings will be retained at £5,000 for 2025/26, allowing individuals with less than £17,570 in employment or pension income to receive up to £5,000 of savings income tax-free.

A change to business rates relief

The current business rates relief system is set to run until April 2025. It effectively serves as a reduction on business rate bills for eligible businesses, with retail and hospitality firms having been key beneficiaries.

The chancellor announced that, from 2026/27, permanently lower tax rates will be introduced for retail, hospitality and leisure properties.

Additionally, for 2025/26, some retail, hospitality, and leisure properties will receive 40% relief on their bills, up to a cash cap of £110,000 per business.

Corporation Tax capped at 25%

The government plans to support businesses to invest by publishing a Corporate Tax Roadmap. This confirms that the government will cap Corporation Tax at 25% for the duration of the parliament.

A rise in the national living wage

Reeves announced a 6.7% rise in the national living wage for workers aged 21 and over, from £11.44 to £12.21 an hour, effective April 2025. For a full-time employee earning the national minimum wage, this means a £1,400 annual pay boost and is expected to benefit more than 3 million workers.

In addition, the national minimum wage for people aged 18 to 20 will rise from £8.60 to £10 an hour.

Apprentices will receive the biggest pay increase, with hourly pay rising from £6.40 to £7.55 an hour.

The announcement could significantly increase outgoings for businesses, particularly when coupled with reforms to employers’ NI.

A freeze in fuel duty

Fuel duty has been frozen since 2011, and the 5p cut brought in by the Conservatives in 2022 has been extended at every subsequent Budget.

Despite speculation that Reeves might increase fuel duty, she confirmed the freeze for another year and extended the 5p cut. This will save the average motorist £59 in 2025/26.

Second home Stamp Duty surcharge increasing

With effect from 31 October 2024, the Stamp Duty surcharge on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property in England and Northern Ireland will increase from 3% to 5%.

This surcharge is also paid by non-UK residents purchasing additional property.

Reforms to the non-dom regime

Currently, for UK residents whose main residence – or “domicile” – is elsewhere in the world, income and gains are taxed differently, depending on factors such as how long individuals are resident in the UK.

The chancellor confirmed that the tax regime for non-domiciled individuals (non-doms) will be abolished from April 2025, claiming that the rules will ensure that those who “make the UK their home will pay their taxes here”.

Moving forward, there will be a residence-based scheme with “internationally competitive arrangements” for those who come to the UK on a temporary basis.

Over the next five years, Office for Budget Responsibility (OBR) figures estimate that these reforms will raise £12.7 billion.

VAT on private school fees from January 2025

As they had promised in their election manifesto, Labour announced that, from 1 January 2025, VAT will apply to all education, training, and boarding services provided by private schools.

Additionally, the chancellor announced that she was removing business rates relief from private schools from April 2025.

An end to the £2 bus fare cap

The £2 cap on bus fares introduced by the previous Conservative administration is due to end on 31 December 2024.

Labour has announced that it will extend the cap for a further 12 months but that the cap will rise from £2 to £3.

Changes to duties for alcohol, tobacco, and vaping

The chancellor confirmed a reduction in the duty for draught alcohol, cutting duty on an average strength pint by a penny. Rates for non-draught products will increase in line with the Retail Prices Index (RPI) from 1 February 2025.

Furthermore, a new vaping duty will be introduced from 1 October 2026, standing at £2.20 per 10 ml of liquid. Meanwhile, there will be a one-off tobacco duty rise designed to maintain the incentive to choose refillable vaping over smoking.

Confirmation of the 4.1% increase to the State Pension under the triple lock

The basic and new State Pension will increase by 4.1% in 2025/26, in line with earnings growth, meaning over 12 million pensioners will receive up to £470 a year more.

Please note

All information is from the Autumn Budget documents on this page.

The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

You’ve probably heard a lot about interest rates rising and affecting the cost of borrowing for mortgage holders over the last two years. But what exactly do higher interest rates mean for you? Read on to find out. 

Borrowers benefited from more than a decade of low interest rates. Between May 2009 and April 2022, the Bank of England’s (BoE) base interest rate was below 1%, so the interest added to debts was relatively small. However, that’s now changed. 

As the UK economy recovered from the Covid-19 pandemic and inflation reached a 40-year high, the BoE started to increase its base rate. As of August 2024, it stands at 5%.  

As inflation fell to the BoE’s 2% target in May 2024, the BoE began to cut interest rates in August 2024. Yet, it’s very unlikely to go back to the historic lows that benefited borrowers previously. 

A mortgage is often among the largest loans you’ll ever take out. So, it’s important to understand how interest rates might affect the cost of borrowing. The interest rate you’re offered could affect your outgoings now and how much your mortgage costs overall. 

The interest rate you pay has a direct effect on your outgoings

When you take out a repayment mortgage, each month, you’ll pay the accrued interest and a portion of the amount you initially borrowed. As a result, the interest rate has a direct effect on your outgoings.

As you typically borrow large sums to buy a home, even a seemingly small change in the interest rate could have a large effect on your regular expenses. 

The table below shows how your monthly repayments would change depending on the interest rate if you borrowed £200,000 through a 25-year repayment mortgage. 

Source: MoneySavingExpert

In this case, a change of just 1% adds more than £100 to your mortgage outgoings. If you borrowed more through a mortgage, the difference would be even more stark.

Shopping around to find a mortgage with a lower interest rate could help reduce your day-to-day outgoings. 

A higher interest rate could mean you pay thousands of pounds more over the mortgage term

It’s not just your monthly budget that’s affected by a higher interest rate. It could affect your financial future more than you expect, as you could pay significantly more over the full term of the mortgage. 

Using the same scenario as above – borrowing £200,000 with a 25-year repayment mortgage – the below table shows how the total cost of borrowing is affected by the interest rate. 

Source: MoneySavingExpert

As you can see, a 2% difference in the interest rate means that over 25 years, you’d pay far more in interest. That extra money could make a huge difference to your financial security or lifestyle. Perhaps you could contribute it to your pension so you’re able to retire sooner, or spend it on holidays to create memories with your family. 

The good news is that there are some steps you can take to reduce how much mortgage interest you pay, including:

• Put down a larger deposit: The more equity you hold, the less of a risk you pose to lenders. So, a lender is more likely to offer you a favourable interest rate if you’re able to put down a larger deposit.
• Review your credit report: Lenders will use your credit report to assess how risky lending to you is. Taking some time to review it first could help you identify red flags and potentially fix them so lenders are more likely to offer a lower rate of interest. 
• Make mortgage overpayments: If you can, overpaying your mortgage can reduce the amount of interest you pay overall. Any overpayment you make will reduce the outstanding balance and allow you to pay off your mortgage faster. Keep in mind that you may have to pay a fee when overpaying, so it’s important to check your paperwork. 
• Shorten your mortgage term: How long you pay your mortgage also affects the total cost of borrowing. As a result, opting for a shorter term could save you money overall. However, it would also increase your monthly repayments.
• Work with a mortgage adviser: There are lots of mortgage deals available to choose from, and it can be difficult to know which is right for you. A mortgage adviser can review deals on your behalf and potentially secure you a better interest rate.

Get in touch if you’d like expert advice when searching for a mortgage

If you’d like to benefit from our expertise when you’re searching for a mortgage, please contact us.

We’ll take the time to understand your mortgage needs, circumstances, and priorities, so we can find a deal that suits you and could potentially help you secure a competitive interest rate that saves you money. We’ll also be on hand throughout the application process to answer your questions and offer guidance. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Think carefully before securing debts against your home.

In July, the markets were affected by general elections taking place in the UK and France, and the ongoing presidential campaign in the US. Read on to find out what else affected investment markets in July 2024.

Uncertainty and numerous other factors may affect the value of your investment portfolio. However, for most investors, long-term trends are a better indicator of their strategy’s performance than short-term movements. Returns cannot be guaranteed, but, historically, markets have risen in value over longer time frames. 

UK

The UK public took to the polls on the 4 July. The results of the general election ended 14 years of Conservative rule when the Labour Party secured a majority. 

The following day saw the FTSE 100 – an index of the 100 largest companies listed on the London Stock Exchange – rise by 0.3% when trading opened.

Housebuilders saw some of the biggest gains as Labour made building 1.5 million new homes over the next five years a key manifesto pledge. According to the Guardian, Persimmon, Vistry Group, Taylor Wimpey and Barratt Developments all saw rises between 1.7% and 2.5%. 

Mid-cap index FTSE 250 also benefited from a post-election bounce when its value increased by 1.8% and reached a two-year high.

New prime minister Keir Starmer stepped into the top job and received welcome news when official statistics were released.

Data from the Office for National Statistics shows that after no growth in April, GDP increased by 0.4% in May. The figure suggests the UK economic recovery is gaining momentum after a technical recession at the end of 2023.

Inflation remained stable during July, as prices increased by 2%, which is the Bank of England’s (BoE) target. The data paved the way for the BoE’s Monetary Policy Committee to cut its base interest rate on 1 August from 5.25% to 5%.

According to S&P Global’s Purchasing Manager’s Index (PMI), the momentum in the service sector in May started to slow in June. However, the slowed pace was linked to the general election as some individuals and businesses opted to see the outcome before they placed orders. So, the sector could see an uptick in July.

Despite the positive signs, many businesses are still struggling. According to business recovery firm Begbies Traynor, the number of firms in “significant” financial distress jumped by 10% in the second quarter of 2024 compared to the first three months of the year.

The numbers are even more stark when you compare them to the same period in 2023 – with a 36.9% rise. Of the 22 sectors monitored, 20 saw an increase in the number of firms in difficulty. 

Europe

Inflation across the eurozone fell slightly to 2.5% in the 12 months to June 2024, according to Eurostat. The figures show inflation varied significantly across the bloc. Finland recorded the lowest rate of inflation at 0.5%, while Belgium had the highest rate at 5.4%. 

With the headline inflation figure still above the 2% target, the European Central Bank opted to hold interest rates.

PMI figures suggest the manufacturing sector is struggling in the eurozone. It was partly pulled down by Germany’s enormous manufacturing sector, which has been contracting for the last two years, according to the PMI. A PMI reading above 50 indicates growth, so Germany’s reading of 43.5 in June suggests the country has some way to go before it starts to grow again. 

The parliamentary election in France and its unexpected twists led to market volatility. On 1 July, the CAC 40 index, which includes 40 of the most significant stocks on the Euronext Paris stock exchange, was up 1.5% as it became less likely a far-right party would secure a majority. 

The final shock results saw the formation of a left-wing coalition. The uncertainty around whether the left could work with Emmanuel Macron’s centrist party led to the CAC 40 falling by 0.5% on 8 July when trading opened. Yet, it returned to positive territory later in the day. 

The EU is reportedly planning to impose an import duty on cheap goods amid concerns from retailers in a move that could affect foreign businesses, such as Temu and Shein. The current limit for import duty is €150 (£126.13), which allows some retailers to ship products from overseas while avoiding a levy. 

US 

The US presidential election doesn’t take place until 5 November, but candidates have already been campaigning for months.

Following an assassination attempt on Republican candidate Donald Trump, Wall Street rose on the 15 July. Expectations of a victory for Trump led to the S&P 500 index rising 0.42%. The share price of Trump’s media company far outstripped the market when it rose by 70% at the opening and briefly led to the business being valued at $10 billion (£7.76 billion).

With Joe Biden stepping out of the presidential race, the results of the election are far from certain and it’s likely to continue affecting markets. 

Inflation in the US continued to fall in the 12 months to June. However, at 3%, it’s still above the Federal Reserve’s 2% target.

Official statistics also show that the US trade deficit widened slightly as exports fell by 0.7% month-on-month in May while imports fell by 0.3%. The deficit now stands at around $75.1 billion (£58.3 billion) and could be a drag on growth in the second quarter of 2024. 

American cybersecurity company Crowdstrike saw its share price plunge by more than 13% when a software bug crashed an estimated 8.5 million computers around the world on 19 July. The error led to services grinding to a halt as it affected banks, airlines, railways, GP surgeries, and many other businesses globally. 

Meta, owner of Facebook and Instagram, also saw its share price fall after the EU ruled it breached a new digital law. Meta’s advertising model that charges users for ad-free versions of its social media platforms that don’t use personal data for advertising purposes was found to breach consumer protection rules. Meta could now face fines of up to 10% of its global revenue. 

Asia 

A growing interest in artificial intelligence led to Japan’s Nikkei 225 index reaching a record high on 9 July, when it increased by 0.6%. 

Over the last few months, statistics have suggested that China could face some challenges if it’s to maintain its pace of growth. However, data shows exports grew at their fastest rate in 15 months in June 2024 thanks to a boost in the sales of cars, household electronics, and semiconductors. 

Year-on-year, Chinese exports grew by 8.6% to $307.8 billion (£258.8 billion). Over the first half of 2024, exports totalled a staggering $1.7 trillion (£1.43 trillion) – a 3.6% increase when compared to a year earlier. Coupled with weaker imports, it led to a record $99 billion (£83.25 billion) trade surplus.

Please note: This blog is for general information only and does not constitute financial advice , which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The trend for wanting your money to have a positive effect on the world when you invest has been growing. If it’s something you’ve considered, the terminology might seem confusing with phrases like “ESG investing” and “impact investing” used interchangeably.

Read on to discover what the difference is and how it might affect your investment decisions. 

ESG and impact investing share similarities but take different approaches 

ESG investing incorporates environmental, social, and governance factors

When you’re making investment decisions using ESG criteria, you’ll consider environmental, social, and governance factors. You might look at a company’s ESG performance. You’d then incorporate these factors into your usual decision-making process. As a result, it may be a useful way to identify businesses that have good ESG practices.

With this information, you might decide to avoid investing in certain companies because their ESG performance doesn’t align with your views, or focus your investments on those that do.

Impact investments aim to have a measurable social or environmental impact 

The Global Impact Investing Network defines impact investing as “investments made with the intention to generate positive, measurable social and/or environmental impact alongside financial return”. Impact investors might target specific sectors or issues that are important to them.

As you can see, while both ESG and impact investing have similar aims, the approaches are different.

In both cases, investors aim to make their values part of their decision-making when deciding how to invest and consider the long-term opportunities and risks. However, impact investing requires investors to measure the impact of their investments.

For example, if climate change is an important issue to you, when you’re taking an ESG investing approach, you might assess a company’s carbon emissions and the steps they’re taking to reduce them. This could lead to you excluding certain businesses from your investment portfolio, such as fossil fuel companies.

Now, if you took an impact investing approach, you’d search for companies that are having a measurable impact on reducing climate change risks, such as firms operating in clean energy or carbon capture technology.

There are ESG and impact investment funds available to choose from. A fund will pool your money with that of other investors to invest in businesses that meet the fund’s criteria. So, you can still incorporate ESG or impact investing values if you prefer to take a hands-off approach.  

Should you choose ESG or impact investing?

There’s no right or wrong answer when you’re deciding between ESG and impact investing – it will depend on your preferences and personal values.

Some investors prefer integrating ESG investing into their existing portfolio. For others, impact investing might allow them to focus on key issues that are important to them. You might even decide to incorporate both ESG and impact investing principles into different parts of your portfolio.

If you’d like to discuss which option is right for you, please get in touch. We’ll take the time to understand your priorities and offer tailored advice that considers your values and goals. 

It’s still important to consider your personal investment goals and risk profile

Whichever option you choose, if you want to incorporate your values into your investments, it’s still important to consider your circumstances. For example, you may consider your:

• Investment goals: While you might want to have a positive impact on the world through your investments, your personal goals are still important – what is your reason for investing? Whether you want to retire early or support loved ones, your answer will often affect investment decisions, including how much risk to take. 
• Investment time frame: With a goal defined, you should have a clearer idea about how long your money will be invested. Typically, you should invest with a long-term time frame of at least five years. Your time frame might also affect your risk profile. 
• Risk profile: All investments carry some risk, but it varies between opportunities. So, it’s important to understand what level of risk is appropriate for you. Several factors may influence your risk profile, including your goals, investment time frame and how comfortable you are with risk. As financial planners, we could help you understand your risk profile. 
• Diversification: Creating a balanced portfolio could reduce how much volatility you experience by investing in a wide range of sectors or geographical locations.

Making your investment decisions part of your wider financial plan could help you make decisions that are right for you and your aspirations. 

Contact us to talk about your investment portfolio

If you want your investment portfolio to reflect your wishes and have a positive impact on the world, please contact us. We could help you balance your values with your financial goals to ensure your portfolio continues to reflect your circumstances and risk profile. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.