The Budget – All Of The Facts

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The did she? didn’t she? game commenced straight after Rachel Reeves first budget – some arguing ‘working people’ didn’t get hit with more tax, whilst others argued ‘we are all workers’ – and we are all going to take a tax hit. We have all the factual details.

Many observers agreed that whatever the result of the game, the serious issue was the need to raise more tax revenue. The only dissenters came from the Tory benches which claimed there was no need to raise extra money whilst decrying how it is to be raised.

Neutrals agreed that the money was needed but many of those wondered about where it is to be spent, the realistic chances of it inspiring growth – and what happens when the money runs out in two years.

Alarmingly, neutrals were also predicting that a sudden influx of cash into the economy will reignite inflation immediately and interest rates within two years to calm it.

You can make you own predictions and observations. The Installer & The Fabricator simply report the facts below as we believe it affects working people and business owners – from house building investment to a penny off a pint.

 

The Budget

The first female Chancellor delivered her budget on 30 October 2024.

 

Housing

A new housing package will include £500 million in new funding for the Affordable Homes Programme, increasing it to £3.1 billion. This brings total investment in housing supply to over £5 billion. The government claims this will support the delivery of tens of thousands of new homes.

£3 billion of additional support will be provided to SMEs and the Build to Rent sector by expanding existing housing guarantee schemes to support a diverse private housing market.

The majority of the 1.5 million homes Labour has committed to seeing built will still come from the private sector – the government’s role will be to push through planning applications not directly offering funding.

 

NHS & Schools

Although promising £billions for both the NHS and schools the biggest proportion will go on services. £1.5 billion will go into NHS capital funding – the proportions to be spent on equipment and building were not clarified. £100 million will be earmarked to carry out 200 GP estate upgrades across England. There should be an uplift in NHS estate development and repair, maintenance and improvement which will filter down to the glass & glazing sector.

Reeves is adamant that this will allow 100 project plans to begin delivery across England next year and begin to tackle the crumbling school and college buildings across the country. The Chancellor will provide £1.4 billion for the school rebuilding programme, including an increase of £550 million this year.

 

Policing

Reeves says she will deliver 13,000 more neighbourhood officers and PCSOs. With crime at an all-time high in the UK, those selling high security products will still be in a strong market position.

 

Wages

The Chancellor confirmed that Income Tax and National Insurance Contributions thresholds will be unfrozen from 2028-29 onwards. Meaning for the Labour Party’s convenient description of ‘workers’ nothing changes – but watch out should they win the next election.

The National Living Wage will increase from £11.44 to £12.21 an hour from April 2025. The 6.7% increase is worth £1,400 a year for a full-time worker.  The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour.

 

Fuel

There will be a freeze on fuel duty for one year with an extension to the temporary 5p cut to 22 March 2026. This will save the average car driver £59, vans £126 and heavy goods vehicles £1,079 next year.

Vehicle Excise Duty (VED) First Year Rates (FYRs) are changing from 2025-26. Rates for zero emission cars will be frozen at £10 until 2029-30 while rates for hybrid and petrol/diesel cars will rise from 1 April 2025.

 

Potholes

The government plans to fix an extra 1 million potholes per year, with an additional £500 million for local road maintenance in 2025-26. This brings the total amount dedicated to fixing the roads in England over the next year to nearly £1.6 billion.

 

Pensions

The full new State Pension will rise from £221.20 to £230.25 a week, providing an additional £470 a year, while the full basic State Pension will increase from £169.50 to £176.45 per week, worth an extra £360 annually.

 

Getting to work

An extra £200 million will be given to Metro Mayors for local transport in 2025/26, bringing City Region Sustainable Transport Settlements to over £1.3 billion. There will be £650 million for improving transport in towns, villages and rural areas alongside city regions. Single bus fares will be £3 until the end of 2025.

 

Connectivity

To boost digital infrastructure in under-served areas across the UK and support growth in the digital and technology sectors, the government will invest over £500 million in Project Gigabit and the Shared Rural Network next year.

 

Inheritance

Inheritance tax thresholds will be fixed at their current levels for a further two years until April 2030.

 

Booze

Generally, alcohol duty will go up in line with RPI, except for beer in pubs. The government is reducing duty on qualifying draught products which equates to a penny off every pint – fill yer boots.

 

Smoking

Ciggies will rise by RPI+2%. Hand rolling tobacco will rise by RPI+12%.  A new vaping duty will be introduced at a flat rate of 22p/ml from October 2026, accompanied by a further one-off increase in tobacco duty to maintain financial incentive to choose vaping over smoking.

The Soft Drinks Industry Levy will increase over the next five years and the duty will also rise in line with inflation every year going forward.

 

First-time buyers

The Higher Rate for Additional Dwellings surcharge of Stamp Duty Land Tax will rise from 3 to 5%, providing those looking to move home or purchase their first property, with a comparative advantage over second home buyers, landlords and businesses purchasing residential property.

 

The Taxman

5,000 additional compliance staff will be recruited and 1,800 debt management staff will also be maintained and recruited. HMRC’s services will be also digitised to make it easier and simpler for taxpayers to self-serve and manage their tax affairs, according the government despite a total failure of HMRC to modernise, collect unpaid taxes, resolve disputes or to effectively deal with personal, emotional tax enquiries via a digital system.

 

Employer National Insurance

The rate of employer National Insurance will increase by 1.2 percentage points, to 15% from 6 April 2025. The Secondary Threshold – the level at which employers become liable to pay national insurance on each employee’s salary – will reduce from £9,100 per year to £5,000 per year.

The smallest businesses will be protected as the Employment Allowance will increase to £10,500 from £5,000 and be extended to all eligible employers by removing the £100,000 cap, allowing firms to employ up to four National Living Wage workers full time without paying employer National Insurance on their wages.

 

Commercial property

The budget also began the government’s reform of business rates. From 2026-27 permanently lower tax rates for retail, hospitality and leisure properties will be introduced. This will be funded by introducing a higher multiplier for the valuable non-high street properties such as distribution warehouses used by online retailers.

It is as yet unclear whether trade counters will get the retail benefit or be hit as warehousing.

 

Business and holiday flights

From 2026-27 Air Passenger Duty rates for short and long-haul flights will be adjusted to partially account for previous high inflation. For economy passengers, this is a £1 increase for domestic flights, £2 extra for short haul and £12 more for long-haul flights, with children under the age of 16 remaining exempt from APD.

APD for private jets will be increased by a further 50%.

 

Private schools

The government will introduce 20% VAT on education and boarding services provided for a charge by private schools from 1 January 2025. The government will also remove business rates charitable rate relief from private schools in England from April 2025.

 

Capital Gains

Capital Gains Tax will increase from 10% to 18% for those paying the lower rate, and 20% to 24% for those paying the higher rate. These new rates will match the residential property rates, which will be unchanged at 18 for the lower rate and 24% for the higher rate.

Business Asset Disposal Relief will remain at 10% this year, before rising to 14% on 6 April 2025 and 18% from 6 April 2026-27.

 

Corporate Tax Roadmap

A ‘Roadmap’ published alongside the budget includes commitments:

To cap the headline rate of Corporation Tax at 25%,

To maintain permanent full expensing and the £1 million Annual Investment Allowance.

To preserve R&D reliefs.

To develop a new process for increasing the tax certainty available in advance for major investments.

 

Turning a buck

New controls will be introduced so that financial investments should by default target a return for the Exchequer that at least covers the government’s cost of borrowing, that all large-scale financial transactions will be managed by expert bodies such as the National Wealth Fund. The government will publish an annual report on the performance and value of its financial assets based on accounts audited by the National Audit Office.

 

Picture: The Chancellor Rachel Reeves delivered her first budget.

Article written by Brian Shillibeer
31st October 2024

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