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UK BUDGET: Reeves makes difficult choices as ups tax by GBP40 billion

Wed, 30th Oct 2024 14:07

(Alliance News) - UK Chancellor of the Exchequer Rachel Reeves said changes to employers' national insurance will raise as much as GBP25 billion as part of a GBP40 billion package to stabilise the UK's public finances.

Calling it a "difficult choice", Reeves said employers' national insurance contributions will rise by 1.2 percentage points to 15% in April 2025, and the threshold for paying them will fall from GBP9,100 per year to GBP5,000.

Reeves said it was right to ask businesses to "contribute more".

Healthy businesses needs a healthy NHS and successful business needs successful education provision, she asserted.

But she also unveiled an increase to the Employment Allowance for small businesses, which allows eligible employers to reduce their national insurance liability.

"This means 865,000 employers won't pay any national insurance at all next year, and over one million will pay the same or less as they did previously," Reeves stated.

Reeves confirmed there would be no changes to income tax, national insurance contributions by employees, or VAT. She added that income tax thresholds will not be frozen beyond the current freeze running to 2028-29. They will then be uprated in line with inflation.

Reeves said the freeze on fuel duty will continue next year, maintaining the existing 5 pence cut as she said that increasing it "would be the wrong choice".

On capital gains tax, Reeves said the headline rate will increase, with the lower rate rising to 18% from 10% and the higher rate to 24% from 20%.

She reiterated the UK government's commitment to the pension triple lock, telling the Commons: "This commitment means that while working-age benefits will be uprated in line with CPI at 1.7%, the basic and new state pension will be uprated by 4.1% in 2025-26."

"This means that over 12 million pensioners will gain up to GBP470 next year."

The chancellor added: "The pension credit standard minimum guarantee will also rise by 4.1% from around GBP11,400 per year to around GBP11,850 for a single pensioner."

Reeves said she will renew the tobacco duty escalator for the remainder of the parliament at retail prices index plus 2%, increase duty by a further 10% on hand-rolling tobacco this year, and introduce a flat-rate duty on all vaping liquid from October 2026.

Draught duty on alcoholic drinks will fall by 1.7%, meaning "a penny off a pint in the pub", she added.

In addition, Reeves confirmed the imposition of VAT on private education will come into force in January, as previously stated.

By Jeremy Cutler, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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