Labour Budget 2024: Key points you may have missed including changes for tax, pensions and minimum wage
by James Harrison, Levi Winchester · ChronicleLiveRachel Reeves has presented the first Labour Budget in 14 years, confirming changes to pensions, inheritance, benefits and taxes. The Chancellor announced £40 billion in tax increases during her speech, with businesses shouldering the majority of the cost due to a confirmed rise in National Insurance contributions paid by employers.
Ms Reeves intends to invest more public funds into schools, hospitals, transport and housing, although experts caution that increased costs on businesses may trickle down to employees through smaller wage increases and less generous pensions. The Chancellor also announced a significant inflation-beating increase in the minimum wage of 6.7% from next April, as part of plans to assist low-income workers.
Other major announcements included the introduction of Inheritance Tax on pensions for the first time, increases to cigarettes and alcohol, and an update on stamp duty. However, the Treasury document released post-Budget revealed additional changes that might have been overlooked.
Child Benefit
Changes to Child Benefit have been scrapped, with the Treasury confirming it will not proceed with plans to consult on changing Child Benefit eligibility based on household income rather than individual income. This follows last year's increase in the thresholds for when Child Benefit repayments must begin.
Previously, the High Income Child Benefit Charge required you to start repaying Child Benefit at a rate of 1% for every £100 earned over £50,000 annually. Now, you only begin repaying Child Benefit when your earnings exceed £60,000 per year, at a rate of 1% for every £200 earned, reports the Mirror.
Help to Save
The Help to Save scheme is a government-issued savings account for individuals claiming Universal Credit or Tax Credits. You can deposit between £1 and £50 each month, and for every £1 saved, you receive 50p back - equating to a 50% return on your investment.
The account has a four-year duration, meaning that if you deposit the maximum £50 each month, you will receive £1,200 in bonuses, based on having saved £2,400 by the end of the four years. In the Budget, it was confirmed that Help to Save will be extended by an additional two years until April 2027.
From April 6, 2025, eligibility will be expanded to all working people on Universal Credit. Currently, you're only eligible for Help to Save on Universal Credit if your take-home pay was £793.17 or more in your last monthly assessment period, including your partner's income if you're part of a couple.
Mortgage Guarantee Scheme
An update on the Mortgage guarantee scheme was also provided.
The Government has unveiled plans to make the mortgage guarantee scheme a permanent fixture. This scheme, backed by the Government, enables first-time buyers to secure a mortgage with just a 5% deposit.
The unique aspect of this scheme is that the Government pledges to cover some costs if your lender incurs losses. Initially set to run until June 2025, Treasury documents have hinted at plans for its long-term continuation.
However, the scheme has faced criticism for its higher rates compared to mortgages with larger deposits.
Rail fares
Meanwhile, regulated train fares in England are set to rise by up to 4.6% next year, and most railcards will see a £5 increase. This was not mentioned in the Budget speech but was revealed in documents published online afterwards.
These changes will take effect from March 2, 2025. Regulated rail fares typically include season, anytime day, off-peak and super off-peak tickets, while unregulated fares - such as advance, anytime, off-peak day and first class fares - are determined by train companies.
ISA limits
In other news, Rachel Reeves has maintained the ISA limit at £20,000 per tax year. This amount can be spread across multiple ISA accounts, although some ISAs have lower limits.
The various types of ISAs currently available include Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs, Lifetime ISAs and Junior ISAs.
In a Lifetime ISA, you can only save £4,000 each tax year, while the limit for a Junior ISA for your child is £9,000. The tax-free limit for how much you can earn in savings also remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
The Treasury has also confirmed plans to scrap the British ISA, which had been initially announced by then-Chancellor Jeremy Hunt earlier this year in his Spring Budget this March. These accounts would have provided savers with a £5,000 top-up to their tax-free savings allowance, in addition to the existing £20,000.
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