Good news for workers, but not so much for businesses

On 30 October 2024, Rachel Reeves delivered her inaugural Budget speech, marking the first time a female Chancellor of the Exchequer presented the Budget. This historic occasion was already noteworthy, regardless of the content.

The Chancellor’s address spanned 76 minutes, beginning with her assertion that tough choices were necessary due to a £22 billion deficit in public finances left by the previous administration.

Upon conclusion, the Budget appeared less severe than some may have anticipated—a likely effect the Chancellor aimed for, given that the principal tax increase, a rise in Employers’ National Insurance (NI), had already been widely anticipated before the Budget’s release.

For workers, the Budget provided stability, with no increases to income tax, national insurance, or VAT. Personal allowances and tax rate bands, frozen by the previous government as part of a strategy known as ‘fiscal drag’, will continue unchanged. Fiscal drag leads to higher tax contributions as wages rise, pushing more income into higher tax brackets. However, the Chancellor pledged that from 2028-29, personal tax thresholds would once again be adjusted in line with inflation.

Businesses, on the other hand, faced tougher measures, including the previously mentioned Employers’ NI increase and hikes in minimum wage rates, which are discussed in more detail in the two articles below.

Retail, Hospitality, and Leisure (RHL) businesses did receive some relief, with a 40% reduction in business rates capped at £110,000 per business. The small business multiplier will also be frozen in 2025-26, and the government has committed to introducing permanently reduced tax rates for RHL properties starting in 2026-27.

Additionally, the Chancellor announced new investments in public services and housing development, which could lead to contracts and opportunities for businesses across various sectors.

If you are concerned about the impact of any Budget measures on you or your business, please feel free to reach out to us for personalised advice.