Martin Lewis: What the Autumn Budget 2024 means for you

Summary

In this budget reaction, Martin Lewis discusses significant changes in the UK's financial landscape, focusing on personal and consumer finance. Key points include an increase in employer National Insurance contributions and a rise in the minimum wage, alongside alterations to stamp duty and inheritance tax regulations. The budget also addresses child benefit eligibility and adjustments to carer's allowances, while maintaining a freeze on income tax thresholds. Lewis highlights the potential impacts on workers and consumers, urging vigilance for those affected by these changes. Overall, the budget reflects a complex mix of challenges and adjustments for various demographics.

Takeaways

• 📈 National Insurance for employers will increase from 13.8% to 15%, impacting many businesses financially.
• 💰 The minimum wage will rise significantly in April, increasing to £12.21 for those over 21, and £10 for ages 18-20.
• 🏡 Stamp Duty for second homes will see an increase from 3% to 5%, effective immediately.
• 📅 The threshold for paying Stamp Duty will drop next April, meaning more people will have to pay it sooner.
• 🏠 Inheritance tax thresholds remain unchanged but will be frozen until 2030, impacting estate planning.
• 🔍 Fiscal drag is a concern, with income tax thresholds frozen, leading to effectively higher taxes as incomes rise.
• 🧑‍⚕️ Carer's allowance will see a slight increase, but the earnings threshold remains a 'cliff edge' that needs addressing.
• 💵 State pension will increase by 4.1%, affecting those relying on it for retirement income.
• 👶 Child benefit will still be assessed based on the highest earner's income rather than household income, which may seem unfair.
• 📉 Capital gains tax rates are increasing, with the basic rate rising from 10% to 18% for shares and assets.

Q & A

What is the significant change in National Insurance contributions announced in the budget?

The employer's National Insurance contribution rate will increase from 13.8% to 15%, and it will now apply on earnings starting from £5,000, compared to the previous threshold of £9,100.

How does the increase in National Insurance affect employers and employees?

Employers may face higher costs, which could lead to reduced profits, increased consumer prices, or lower salaries and benefits for employees.

What is the new minimum wage for workers over 21, effective next April?

The minimum wage for workers over 21 will increase from £14.00 to £12.21 per hour, which is a 6.7% rise.

What changes were made regarding stamp duty for second homes?

The extra stamp duty for purchasing a second home will rise from 3% to 5% starting immediately.

What are the implications of the frozen inheritance tax thresholds?

The thresholds for inheritance tax, currently at £325,000, will remain frozen until 2030, meaning more estates could be liable for tax due to inflation.

What significant change is happening to pensions and inheritance tax from 2027?

Starting in 2027, inheritance tax will apply to pensions, which was previously tax-free for those under 75.

How does fiscal drag affect taxpayers in the coming years?

With income tax thresholds frozen, as earnings rise due to inflation, individuals will effectively pay more tax, even without a formal tax increase.

What changes were announced regarding the carer's allowance?

The carer's allowance will see a slight increase from £8190 to £8329 per week, and the earnings threshold will rise from £11 to £196 per week.

What will be the change in child benefit assessments?

The assessment for child benefit will continue to be based on the highest earners' income rather than household income, which could lead to perceived inequities.

What updates were made to capital gains tax in the budget?

The basic rate of capital gains tax will increase from 10% to 18% for shares and other assets, while the higher rate will rise from 20% to 24%.