Advertisement
Christmas Special - Get your first 12 issues for just £12
SUBSCRIBE
News

A penny off pints and higher wages: What Rachel Reeves' budget means for you and your bank account

From inheritance tax, through to carers, smokers, and pint-drinkers, Big Issue has been through the detail to tell you exactly what Rachel Reeves's autumn budget will mean for you

Chancellor Rachel Reeves ahead of the autumn budget 2024

Rachel Reeves has delivered Labour's first budget in 14 years. Here's what it means for your money. Image: Simon Dawson/No 10 Downing Street/Flickr

Chancellor Rachel Reeves has delivered the first Labour budget in 14 years, unveiling £40bn in tax increases and a slightly dimmer GDP forecast.

Experts will argue over what it means for the broad direction of the country. But across a speech which lasted almost the duration of a full football match, Reeves dropped a steady stream of measures which will have a direct impact on your finances.

Lord John Bird, founder of the Big Issue and crossbench peer, said the budget “falls short of addressing the biggest issue in the UK – our escalating poverty crisis”.

Lord Bird praised investments in school breakfast clubs and cash to tackle homelessness and rough sleeping but called for more investment in preventing poverty.

“If borrowing rules can be fiddled to make way for this infrastructure investment, why not for poverty-busting investments in people? In health, education, and housing?” added Lord Bird.

“Things will only change if we spend serious money on breaking the cycle of poverty – on preventing and curing poverty. We can’t wait for fairweather days to roll over the hill before we take action.”

Advertisement
Advertisement

From inheritance tax, through to carers, smokers, and pint-drinkers, Big Issue has been through the detail to tell you exactly what it’ll mean for your bank balance.

Minimum wage is going up

The big news from Reeves’s budget is an increase in the minimum wage. For over-21s, the National Living Wage is increasing from £11.44 to £12.21 an hour from April. It already rose from £10.42 this year, and 2025’s hike will be a smaller percentage increase than the two previous years. For a 40-hour week, that’s going from an annual salary of £23,795 to £25,396.

Elsewhere, 18-20-year-olds are getting a rise from £8.60 to £10, while apprentices are going from £6.40 to £7.55. That’s because Labour wants to get the minimum wage to the same level for all adults – by bigger increases for 18-20-year-olds.

Carers will be able to work more

Carers can now earn over £10,000 a year before their carer’s allowance gets cut off, as Reeves has increased the weekly earnings limit to 16 hours at the National Living Wage. At the dispatch box, Reeves said it was the greatest increase in carers’ allowance since it was introduced in the 1970s.

‘Fiscal drag’ means income tax will stealthily rise

Reeves made much of her decision to not extend the freeze on income tax thresholds. “Extending the threshold freeze would hurt working people,” she said, announcing no extension of the freeze beyond 2028. From 2028/29, personal tax thresholds will be uprated in line with inflation. 

But, as it relates to the next five years, Reeves has decided to keep the thresholds the same. To recap, one common feature of recent budgets is a “stealth tax” rise from keeping income tax thresholds the same. Because of inflation, more people will start paying income tax, and annual wage rises will push workers into higher tax brackets. The measure raises tens of billions for the government. It has been frozen since April 2022, and under the Conservatives the freeze was set to extend until 2028. Reeves has gone along with the status quo for the next three years.

Advertisement

Petrol taxes won’t rise

“There will be no higher taxes at the petrol pumps next year” Reeves said. Rather than increase fuel duty by 7p per litre, it will remain frozen next year – continuing a Conservative budget tradition.

Bus prices will increase from £2 to £3 for many

The increase in capped bus fares from £2 to £3 has been slammed, coming alongside the freeze in fuel duty for drivers. The cap doesn’t apply to all routes, and was due to expire in December. Now it’ll be extended to December 2025, but made 50% higher.

What you pay will depend on where you live. Greater Manchester mayor Andy Burnham has committed to keeping the £2 cap.

Pints will be 1p cheaper

Promising “a penny off the pint in the pub”, Reeves announced a 1.7% cut to draft duty. With the average pint in the UK costing £4.79, it’ll take a few pints to feel the benefit.

Second homes and becoming a landlord will cost more

Reeves was expected to end the freeze on stamp duty thresholds, a move which could have cost the average first-time buyer in London £6,000 and prompted outrage. This didn’t materialise.

But second homes will get more expensive, with Reeves announcing an increase on the higher rate of stamp duty for second homes and buy-to-let properties from 3% to 5%.

Advertisement

“This means that the playing field has been levelled between first-time buyers and prospective landlords,” said Liz Emerson, CEO of the Intergenerational Foundation.

Employer National Insurance contribution increases could be passed on to workers

One of Reeves’ biggest budget money-makers was an increase in National Insurance contributions paid by employers. Successful businesses, she argued, depend on healthy schools. Yet a “substantial amount” of this will be passed on through wages, the OBR found. Paul Johnson, director of the Institute for Fiscal Studies, estimated “probably three quarters or so of the increase will flow through to lower pay”.

Mortgage rates are not expected to fall as fast or as far as previously thought

Reeves’s budget has seen the OBR predict interest rates will fall – but at a slower rate than previously expected.

Bank rates – which heavily influence mortgage interest rates – are expected to drop to 3.5% from 2027. This is 0.5% higher than in March’s forecast.

Wages are set to rise faster than previously thought, but disposable income will stagnate

Earnings growth will fall from 4.7% this year to 3.5% in 2025, the OBR has forecast. This is higher than March’s forecast, the OBR said, and will then sit at an average of 2.25%.

However, disposable income will grow by just 0.5% over the next five years.

Advertisement

Inheritance tax is being tweaked

Reeves is extending the freeze on the £325,000 income tax threshold until 2030, and changing some exemptions to the tax.

An increase in inheritance tax is deeply unpopular – 56% oppose it, while just 29% support it – and often branded a “death tax”. But very few ever pay inheritance tax. Spouses and civil partners are exempt, and only 4% of families are subjected to it, given the threshold is £325,000.

Reeves announced two changes: bringing inherited pensions into inheritance tax from April 2027, and bringing more business and agricultural assets – think farms – into the regime.

Tobacco duty will make smoking and vaping more expensive

Smoking is going to get more expensive. Duty on hand-rolling tobacco will increase by 10%, the government will introduce a flat tax on vaping liquid from October 2026, and the “escalator” on tobacco duty is back, meaning it will increase by inflation plus 2%. There will also be a one-off increase in tobacco duty.

Flying is getting taxed slightly more

Air passenger duty is increasing, a rise which Reeves says will add no more than £2 to the price of a short-haul economy flight. For the private jet travellers among you, a tax increase of 50% will add £450 to the likely cost.

Universal credit deductions will be capped

Reeves will reduce the amount of benefits which can be taken each month for automatic debt repayments, from 25% to 15% of standard allowance. This means 1.2m of the poorest households will keep more of their benefits, Reeves said, adding it will lift children out of poverty, with an average gain of £420 a year.

Advertisement

Research shows most universal credit claimants are in debt.

Do you have a story to tell or opinions to share about this? Get in touch and tell us more. Big Issue exists to give homeless and marginalised people the opportunity to earn an income. To support our work buy a copy of the magazine or get the app from the App Store or Google Play.

Big Issue is demanding an end to extreme poverty. Will you ask your MP to join us?

Advertisement

Change a vendor's life this Christmas

This Christmas, 3.8 million people across the UK will be facing extreme poverty. Thousands of those struggling will turn to selling the Big Issue as a vital source of income - they need your support to earn and lift themselves out of poverty.

Recommended for you

View all
Renters' Rights Bill ‘can’t come soon enough’ as Section 21 eviction claims at eight-year high
Renters could face a further wait to see no-fault evictions scrapped through Renters Reform Bill
Renting

Renters' Rights Bill ‘can’t come soon enough’ as Section 21 eviction claims at eight-year high

Loss of physical bank branches leaving pensioners at 'greater risk of scams'
Row of banking buildings in Canary Wharf, London
Financial and digital inclusion

Loss of physical bank branches leaving pensioners at 'greater risk of scams'

Sadiq Khan warns lack of affordable homes causing ‘profound and devastating’ effect on Londoners
Media shot of Mayor of London Sadiq Khan
Housing

Sadiq Khan warns lack of affordable homes causing ‘profound and devastating’ effect on Londoners

1 in 5 Brits say they've sofa surfed amid record levels of homelessness heading into Christmas
John Bird, Big Issue vendors and support workers gather to celebrate the launch of Big Issue's Christmas appeal
Homelessness

1 in 5 Brits say they've sofa surfed amid record levels of homelessness heading into Christmas

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know