On 30 October 2024, Rachel Reeves delivered her first Budget speech. As the first Budget speech ever delivered by a female Chancellor of the Exchequer, the occasion was bound to be one for the history books regardless of what was said.
The Chancellor’s speech lasted 76 minutes and right from the start she claimed that difficult decisions were having to be made because of the £22bn ‘black hole’ left in the public finances by the previous government.
Once the speech had concluded there was a feeling that the Budget may not have been as bad as we might have expected. This is likely the effect the Chancellor was hoping for and may have had something to do with the fact that the main way of increasing taxes – from a rise in Employers National Insurance (NI) – had already been strongly indicated before the Budget took place.
For working people, the Budget maintained the status quo with no increases to income tax, national insurance or VAT. The personal allowances and tax rate bands were frozen by the previous government as a way of raising taxes known as ‘fiscal drag’. This is because as pay increases, more earnings are likely to be taxed at higher rates. The Chancellor did promise that from 2028/29, personal tax thresholds would be uprated in line with inflation once again.
However, businesses were one of the big losers in the Budget, largely through the aforementioned Employers NI increases as well as increases to the minimum wage rates, which are both explored in the two articles below.
Retail, hospitality and leisure (RHL) businesses received some support through continued business rates relief. For the 2025/26 tax year, RHL businesses will be given a 40% relief on their business rates, subject to a cap of £110,000 per business. The small business multiplier will also be frozen in 2025/26. These are interim measures as the government intends to introduce permanently lower tax rates for RHL properties with rateable values under £500,000 from 2026/27.
The Chancellor also announced investments in public services and home building. These may mean contracts and work for businesses across various sectors.
If you are concerned about how any of the Budget measures will affect you and your business, please get in touch at any time and we will be happy to provide you with personalised advice.
Chancellor Rachel Reeves spoke last week at a meeting of EU finance ministers as part of the government’s attempt to perform an economic reset with the EU. It was the first time a UK chancellor has attended such an event since the UK left the EU.
HM Revenue and Customs (HMRC) have announced the launch of a new interactive online tool and clearer guidance for those who are already self-employed and those considering it.