Chancellor of the Exchequer Rachel Reeves today published Autumn Budget 2024, striking a balance between fiscal prudence and growth. The budget focuses largely on pensions, tax reform, and public investment as initiatives to strike growth. Here is a breakdown of the key announcements.

1. Pensions and Retirement Reforms

• Flat Rate Tax Relief: A potential shift to a flat 30% tax relief for pension contributions aims to provide equitable benefits across income levels.
• Tax-Free Lump Sum: The current 25% tax-free limit (capped at £268,275) may soon be reduced to £100,000, impacting high-net-worth savers.
• Employer NICs on Pension Contributions: New national insurance contributions will apply to employer pension payments, affecting salary sacrifice schemes.​​

2. Tax Changes: APD and Business Impact

• Air Passenger Duty (APD): The government will increase APD rates from April 2025, with premium cabin seats facing the largest hikes to account for inflation. This could impact tourism and business travel​.
• Employer NICs Increase: A 1.2% rise in NICs will put additional pressure on businesses, especially small and medium enterprises​.

3. Capital Gains, Inheritance Tax, and Public Finances

• Inheritance Tax (IHT): While IHT reliefs have been tightened, the government avoided drastic changes. The threshold freeze until 2030 will still pull more estates into taxable limits​
• Capital Gains Tax (CGT): Adjustments will reduce the tax-free allowance further, impacting long-term investors.

4. Impact on the British Pound (GBP)

• The pound slipped against the dollar and euro following the budget announcement, reflecting market concerns over austerity and slower economic growth. Businesses are cautiously assessing how the reforms will affect investment and spending​.

5. Investment in Public Services and Infrastructure

• Healthcare and Education: The NHS will receive an additional £3.3 billion to address ongoing healthcare pressures. Schools will also benefit from a budget increase of £2.3 billion next year.
• Infrastructure Projects: Major projects, such as the HS2 rail line and Sizewell C nuclear plant, will proceed as planned, signaling a commitment to long-term growth.

The full details of the budget can be found on the HM Treasury website.