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UK Autumn Budget 2024
Forgoing the despatch box alcoholic tipple traditionally granted to the Chancellor, the Budget delivered by Rachel Reeves this afternoon was sober in more ways than one.
Despite weeks of rolling the pitch for “difficult decisions” with repeated references to an “inherited £22 billion black hole”, today’s confirmation of tax increases worth £40 billion was a bold political move, representing the biggest hike in three decades.
But while greater levies on employers’ national insurance contributions may be unwelcome news to companies already operating in the UK or considering doing so, Labour’s first Budget since 2010 was not all doom and gloom for corporations.
Ahead of the Budget, Reeves confirmed that she would change the UK’s fiscal rules to make space for increased public sector investment. The subtext from Reeves was that the price of doing business in the UK is going up – but that the proceeds will be invested in making the country a healthier, more stable and environmentally friendly location.
Writing in the Financial Times, the Chancellor said that the Government’s investments in the UK would “boost productivity, enhance the green transition and deliver the infrastructure we need to grow”.
Her announcements included in today’s Budget offer opportunities for businesses looking to engage with and support the Government as it seeks to, in Reeves’ own words, “rebuild Britain” with over £35 billion in spending on economic infrastructure over the next year alone.
Rud Pedersen has summarised the Budget’s key announcements for businesses across a range of sectors below.
Energy
- Funding for 11 new green hydrogen projects across England, Scotland and Wales.
- £3.4 billion made available over next three years towards the heat decarbonisation and household energy efficiency of 340,000 homes.
- Windfall tax on oil and gas profits increased to 38%.
Transport
- £2 billion over 5 years to support the automotive sector including the zero-emissions vehicle manufacturing sector and supply chain.
- A freeze in fuel duty rates for 2025-26 as well as a 12-month extension of the 5p cut per litre, now expiring in March 2026.
- The £2 cap on single bus fares in England to rise to £3 from January, as part of a £1 billion overall package of local bus funding
- Funding committed for tunnelling work to extend the HS2 high-speed rail line to Euston.
- Commitments to improve and electrify rail connections across the north of England and to create a new Oxford-to-Cambridge service.
Defence
- £2.9 billion of additional total funding to the Ministry of Defence.
- £975 million for the aerospace sector over 5 years to fund research and development for the latest technology.
Housing
- £5 billion in investment for housing, including a £500 million boost to the Affordable Homes Programme to build up to 5,000 additional homes.
Health
- £1.5 billion capital funding in total for new surgical hubs and diagnostic scanners to build capacity for over 30,000 additional procedures.
- £2 billion will be invested in NHS technology and digital to run essential services and drive NHS productivity improvements, improve cyber security and enhance patient access.
Infrastructure
- £500 million in funding in 2025-26 to drive the rollout of digital infrastructure to underserved parts of the UK, including delivering full gigabit broadband coverage by 2030.
- £1.4 billion in funding to rebuild schools impacted by RAAC (reinforced autoclaved aerated concrete) and £2.1 billion for maintenance of school buildings.
- £1.6 billion in funding for local roads maintenance.
FMCG
- Tax rates on bottled beers, wines and spirits will increase in line with retail price inflation from February 2025.
- Tax on draft beer will fall by 1.7%.
- A flat rate duty on vaping products at £2.20 per 10ml of liquid from October 2026.
- A 10% increase in duty on hand-rolled tobacco and a one-off tobacco duty rise.
Business Taxes and Rates
- Employers’ National Insurance contributions will rise by 1.2% to 15% from April 2025. The threshold at which employers pay on an employee’s salary has been lowered from £9,100 to £5,000.
- Corporation tax will remain at 25% for the duration of this Parliament.
- National minimum wage will rise by 6.7% to £12.21 per hour from April 2025, and the minimum wage for people aged 18-20 to rise by 16.3% to £10 per hour.
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