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Autumn Budget 2024 predictions - what to expect on taxes, wages, pensions, benefits and the cost of living
by Fionnula Hainey · Manchester Evening NewsLabour's first Budget under Sir Keir Starmer's leadership will have big implications for taxes, wages, benefits, pensions and the cost of living.
Chancellor Rachel Reeves will be laying out the government's plans for the economy on Wednesday afternoon as she looks to fill a £40 billion funding gap.
She has said she will be using her speech to MPs, which is set to take place shortly after PMQs at midday, to make "difficult decisions on spending, on welfare and taxation" which will put "our public finances and our public services on a firmer footing".
Labour made a promise in its manifesto not to raise taxes on "working people", ruling out any increases to the rate of national insurance, income tax or VAT. However, a number of tax rises that do not directly affect workers are expected to be laid out - including changes to inheritance tax and the contributions that employers make through National Insurance.
In addition, Ms Reeves is expected to confirm how much benefits, state pensions and the minimum wage will rise by from April next year, boosting the income of millions. There are also a number of welfare reforms on the cards, as well as a hike in fuel duty and the end of stamp duty holidays, according to reports.
Here's what we know so far about how Wednesday's Autumn Budget could impact tax, wages, the price of goods and services and more...
What tax changes could be announced?
Employer National insurance contributions
One of the biggest changes to taxes could be for employers.
Ms Reeves is expected to announce an increase in the rate of National Insurance contributions that employers must pay. The rate of National Insurance for employees is expected to stay the same after Labour promised not to increase taxes on working people.
Although Labour has insisted increasing employer contributions would not count as a higher tax for working people, critics have suggested the move could hit small businesses owners particularly hard, perhaps putting them off hiring additional staff due to the extra costs involved.
Employers currently pay National Insurance at a rate of 13.8 per cent on all employees' earnings above £175 per week. Increasing the rate to 14.8 per cent could raise as much £8.5 billion a year for the Treasury.
READ MORE: Four Autumn Budget tax changes expected this week and what they mean for you
Increase in Capital Gains Tax
Capital Gains Tax (CGT) could be raised by Ms Reeves in the budget. The tax, paid by around 350,000 of the wealthiest earners, applies to the sale of assets including second homes and shares.
There are different CGT rates for property assets and other chargeable assets such as shares.
The rate of CGT for high earners on the sale of shares and other chargeable assets is currently 20 per cent. The Times has reported it could be increased by "several percentage points" to earn revenue in the "low billions" for the Treasury.
The rate of CGT for residential properties is currently 24 per cent. However, reports suggest the government could be less inclined to hike that rate over concerns about what it might do to the property market.
Speculation has been growing that the government will move to bring CGT rates more in line with income tax rates, which are currently as high as 45 per cent for the top earners.
Changes to inheritance tax allowances
The way inheritance tax is paid could see some major changes in the budget.
The vast majority of the public does not currently have to pay inheritance tax, which is set at 40 per cent of an estate's value above £325,000. At the moment, only 4 per cent of deaths result in an inheritance tax charge.
But the government could be looking to widen this pool in a bid to raise more money through the tax.
There are currently several exceptions and allowances when it comes to inheritance tax. For example, the threshold at which you have to pay increases to £500,000 if the person leaves their estate to a child or grandchild. Leaving part of your estate to charity can also result in the rate of inheritance tax being slashed.
Changes to allowances and exceptions such as these are reportedly under ministers' consideration.
Income tax thresholds frozen
An increase to the rate of income tax workers pay has been ruled out by Labour, but Ms Reeves is expected to confirm the continuation of a freeze on income tax thresholds.
The move would bring more people into the tax system as wages rise, potentially raising around £7 billion for the Treasury.
The move would likely be an unpopular choice for the Labour party after senior figures described the freeze as a "Tory tax rise" ahead of the general election.
Income tax thresholds were frozen by the previous Conservative government in 2022. The freeze is currently due to end in 2028.
Changes to council tax
Rumours of a major change to council tax rates have been circulating in the lead up to the Budget, but the government has remained tight-lipped on whether there is any truth in them.
According to some reports, the government could replace the council tax band system with a flat 0.5 per cent rate based on the value of a home. This move would leave some paying more council tax, but others paying less.
Deputy Prime Minister Angela Rayner previously said Labour had 'no plans' to raise current council tax rates.
Rumours have also suggested the government could be looking to scrap the 25 per cent discount for people living alone. Ministers have not yet ruled out changes to the discount.
What products and services will go up in price?
Petrol and diesel
Fuel duty could be raised for the first time in more than a decade, leaving motorists facing higher prices at petrol pumps.
The Tories froze fuel duty between 2010 and 2022, before then cutting it by 5p to 52.95p per litre in response to the situation in Ukraine. Reports suggest the government may now be about to confirm the end of the 5p cut, which is due to expire in March next year.
If the government decides not to freeze duty again, drivers will likely have to pay more for their fuel and diesel. The AA has suggested the rise will add an extra £3.30 to the average driver's bill each time they fill up.
Buying property
Buying a property could become much more expensive for some, including those purchasing their first home, from next spring.
Ms Reeves is expected to confirm the end of stamp duty discounts introduced by the Tories in 2022. The move, which would see stamp duty thresholds return to lower levels, could raise £1.8 billion a year by 2029.
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Stamp duty is paid on properties or land over a certain amount in England and Northern Ireland. As of 2022, current homeowners pay nothing on stamp duty unless their property is above £250,000. For a first-time buyer, the nil-rate for stamp duty applies to properties worth up to £450,000.
Those rates are only due to last until March 2025, when they are due to drop significantly. The threshold for current homeowners will revert to £125,000, while £300,000 will be the threshold for a first-time buyer.
Analysis by consumer watchdog Which? found that buyers will be facing an average £2,500 rise in their stamp duty bill, but some could end up paying as much as £11,000 more.
READ MORE: The four things set to cost more in UK after Autumn Budget
Private school fees
The government is set to remove VAT exemption on private school fees from January next year, which could see some parents paying more to send their kids to school.
Currently, independent schools do not have to charge 20 per cent VAT on their fees because there is an exemption for the supply of education. However, that is set to change next year when the VAT exemption and business rates relief for private schools will be removed.
It is one of the measures that will appear in the Budget that the government has already confirmed.
The move aims to raise funds for 6,500 new teachers in state schools, the government has said. It is expected to lead to a hike in school fees to cover the additional costs, although ministers have argued that many schools will not raise their fees as a result of the new policy.
Earlier this month, Treasury minister James Murray defended the plans, arguing that most private schools would be able to keep fee increases affordable for parents by absorbing a "significant proportion" of the new VAT charges. He said some schools have committed to absorbing the VAT liability entirely, while others are capping fee increases at 5 per cent or 10 per cent.
Bus fares
The £2 cap on bus fares will rise to £3 next year. The prime minister confirmed that the change will be part of the Autumn Budget during a speech in Birmingham on Monday morning.
Single bus fares in England have been capped at £2 outside London, where they are £1.75 per journey for most routes, since January last year.
The government says the higher £3 cap will still save passengers up to 80 per cent on some routes.
The cap will mean no single bus fare on routes included in the scheme will exceed £3, and routes where fares are less than £3 will only be allowed to increase by inflation in the normal way.
In Greater Manchester, metro mayor Andy Burnham has pledged to keep the £2 bus fare cap in place across the region. He confirmed the move on Tuesday (October 29), a day after Sir Keir announced the nationwide increase.
Vaping
There are rumours that Ms Reeves is considering introducing a new vapes levy.
Vaping products are currently subject to VAT at 20 per cent but, unlike tobacco, they are not also subject to excise duty. The Tories had unveiled plans to impose the charge on vaping products from October 2026, with the price rise determined by how much nicotine is in the e-liquid.
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Reports suggest Ms Reeves will veer away from this approach, instead imposing the same rate of tax on vaping products no matter what the nicotine strength.
It is likely that any hike to vape taxes could be matched with an increase in tobacco tax, to ensure people are still encouraged to switch to vaping if they are trying to stop smoking.
What announcements will there be for people on benefits?
New DWP and HMRC benefit payments rates
Ms Reeves is expected to confirm how much benefits paid by the DWP and HMRC will rise by in April 2024.
Benefits such as Universal Credit, PIP and Child Benefit could be in line for an increase of just 1.7 per cent if September's CPI inflation figure is used to calculate the uprating, as it has ben in previous years.
Earlier this month it was announced inflation in September fell below the Bank of England's 2 per cent target. But while that's positive news for Brits during the cost of living crisis, the drop could be badly timed for benefit claimants hoping for a bigger boost to their payments next year.
READ MORE: DWP and HMRC benefits and pension changes expected in the Autumn Budget
Reforms to Universal Credit work capability assessments
Ms Reeves could provide further details on how she plans to reform work capability assessments to get more benefit claimants back into work.
Work capability assessments for those on Universal Credit determine whether claimants with a health condition or disability are able to work, and whether they are eligible for additional top up payments.
The previous Conservative government planned to raise around £3 billion by tightening the rules so that around 400,000 more people who are signed off long-term would have to prepare for employment by 2028/29.
The Labour government now looks set to continue the mission with their own plans to reform the system. A spokesperson for the government said the current assessments are "not working" and need to be reformed. "We will deliver savings through our own reforms, including genuine support to help disabled people into work," they said.
Universal Credit boost of £420
Some households who are on Universal Credit could see their income boosted by around £420 a year with a new cap on the amount the government can deduct from benefit payments.
According to reports in The Guardian, a new Fair Repayment Rate from April next year will cap the amount that can be taken from benefit payments each month to repay short-term loans and debts.
The current cap on monthly deductions is 25 per cent of a claimant's standard allowance, but the new rate would reduce the cap to 15 per cent, helping 1.2 million of the UK's poorest households, the paper reports.
Increase to Carers Allowance earnings threshold
The government is expected to announce a change to the earnings threshold for Carers Allowance, which would be "good news" for the 1.4 million people claiming the benefit, according to money saving expert Martin Lewis.
Mr Lewis announced on X, formerly Twitter, on Tuesday afternoon that he has had it confirmed that the government will announce an increase to the earnings threshold, meaning carers earning more money will still be eligible for the benefit.
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Carers Allowance is a weekly benefit of £81.90 for people who care for someone for at least 35 hours a week. Currently, if a claimant is working and earns more than £151 a week, they are not eligible for the payment.
According to Mr Lewis, the DWP is set to announce that the earnings threshold will rise by "over £30 extra a week" from next April, so that claimants can earn as much as £181 a week before having the benefit taken away.
What announcements will there be for pensioners?
Basic and new state pension payments to increase
The triple lock guarantee will see state pensions rise by more than 4 per cent next year.
Ms Reeves is expected to confirm that the new and basic state pensions rates will rise in line with earnings growth, which was 4.1 per cent up to July.
Under the triple lock, payments rise in line with earnings growth, September's rate of Consumer Prices Index inflation, or 2.5 per cent - whichever is highest.
A 4.1 per cent state pension rise would see around £470 extra a year handed to those on the new state pension. The new state pension, for people who reached state pension age after April 2016, would rise from £221.20 per week to £230.30 next year, while the old basic state pension would increase from £169.50 per week currently to £176.45 next year.
Changes to pension tax rules
Reports suggest Ms Reeves could be looking to change the rules around how pensions are taxed. According to the Telegraph, the government is considering slashing the tax-free lump sum that people can take from their pensions.
Under current rules, savers can take 25 per cent of their pensions as a tax-free lump sum up to a cap of £268,275 from the age of 55.
But if the tax-free cap was lowered to just £100,000, around £2 billion could be raised for the government.
Ms Reeves is also said to be considering a flat rate of pension relief at 30 per cent. Currently, savers receive tax relief on their pensions at their current tax rate.
Are wages going up?
The chancellor has confirmed that she will be announcing a significant pay rise for people on the minimum wage.
The rate will rise to £12.21 an hour next year for people ages 21 and over - a 6.7 per cent increase - from April 2025.
Ms Reeves said the move was a "significant step" towards delivering on Labour’s manifesto promise of a "genuine living wage for working people". However, it still falls short of the £12.60 per hour UK living wage calculated by the Living Wage Foundation.
The 6.7 per cent increase, recommended by the Low Pay Commission, will mean an extra £1,400 a year for a full-time worker earning the main minimum wage rate, known as the national living wage. The minimum wage for people aged 18 to 20 will rise to £10 an hour, an increase of £1.40.
The minimum wage for apprentices and those aged 16 to 17 will increase by 18 per cent, reaching £7.55 an hour.
The changes mean that a total of 3.5 million workers are expected to receive pay rises next April as a result.