Here’s the lowdown on the key points from Chancellor Rachel Reeves’ Autumn Budget, featuring tax changes and stamp duty adjustments.
During the Autumn Budget announcement on October 30th, Chancellor Rachel Reeves emphasized the goal of restoring economic stability and generating £40 billion from new tax policies to support economic growth.
Key property market changes
There will be a boost towards affordable housing with funding allocated for 5000 new homes under the Affordable Homes Programme. The £500 million Affordable Homes Programme will be increased to £3.1 billion, which the government claims will be the biggest annual budget for affordable homes in over ten years.
Buyers looking for second homes in England or Northern Ireland will face a stamp duty rate increase of 3%, going up from 2% to 5% from October 31st.
First-time buyer stamp duty threshold
The first-time buyer stamp duty threshold will drop back down to £300,000 from March 2025 after being temporarily uplifted by the previous government to £425,000. The failure to extend the higher level of stamp duty relief beyond 31 March 2025 will come as a disappointment to first-time buyers.
Other key highlights
- The freeze in income tax and national insurance thresholds will end in 2028. Tax thresholds usually increase with inflation. However, in 2022, the Conservative government froze thresholds until 2028. The freeze ending in 2028 is likely to mean that people will be prevented from falling into higher tax bands as their wages rise. The current tax threshold is £12,750 (i.e. before you pay any tax).
- The inheritance tax threshold freeze has been extended from 2028 to 2030. This currently means the first £325,000 of any estate can be inherited without paying tax, increasing to £500,000 if the estate includes a property passed to direct descendants and £1 million if passed to a surviving spouse.
- The National Minimum Wage for 18 to 21-year-olds is rising from £8.60 to £10 per hour in April 2025.
- The National Minimum Wage for over 21s will increase from £11.44 to £12.21 per hour also from next April.
- Apprentices and workers under the age of 18 will see their hourly rate increase from £6.40 to £7.55 in April 2025.
- Fuel duty will remain frozen, and the Chancellor has stated that there will be no higher taxes at petrol pumps next year.
- VAT will be introduced on private school fees from January 2025.
- Employers are facing higher national insurance rates starting next April. Firms will have to pay National Insurance on their employees’ earnings above £5000, compared to the current level of £9100.
- Employment Allowance (which allows companies to reduce their tax liability) is doubling from £5000 to £10,500.
- Corporation tax for profitable businesses will remain at 25%.
- Employees will have ‘increased protections’ at work to protect them from unfair dismissal.
- The Carer’s Allowance earnings limit will increase by over £30 per week in April 2025. The current limit is £151 a week, and the exact new figure has yet to be specified, but the government says it will be equivalent to 16 hours work at the minimum age.
Relying on family for financial support
In relation to the stamp duty decisions, with over a third of first-time buyers already seek financial support from family, the reduction of the stamp duty threshold at the end of March could put more pressure on aspiring homeowners. If you are thinking of buying your first home, you’ll need to act swiftly if you want to benefit from the higher stamp duty threshold before it is reduced next April. We’re here to help if you need advice.
Some industry experts have also criticised the government’s failure to implement the Freedom to Buy Scheme, which was designed to make home ownership easier by having lenders accepting lower deposits.