Chancellor Rachel Reeves has delivered her first budget, outlining pivotal changes in national insurance, living wages, and business rates.
- There will be no increases in National Insurance, VAT, or income tax, yet businesses will face a rise in National Insurance to 15% from April 2025.
- Retail and hospitality sectors will receive a 40% relief on business rates, up to a cap of £110,000, while the current 75% discount expires in April 2025.
- The minimum wage will be increased to £12.21 per hour for over-21s starting April 2025.
- Capital gains tax will see an increase, with basic rates moving from 10% to 18%, and higher rates from 20% to 24%.
In her debut Budget announcement, Chancellor Rachel Reeves declared she would impose no additional National Insurance, VAT, or income tax. However, businesses will experience an increase in National Insurance rates, which will rise to 15% from April 2025. She described the adjustment as a “difficult choice” made to balance the nation’s finances.
Retail and hospitality businesses are set to benefit from a 40% relief on business rates, though this is capped at £110,000 per business. This relief comes as the current 75% discount on business rates is scheduled to end in April 2025. The decision aims to provide continued support to these sectors, maintaining stability during challenging financial times.
The Budget also announced a rise in the minimum wage to £12.21 per hour for those over 21, effective from April 2025. This change is part of the Chancellor’s commitment to supporting workers across the United Kingdom amidst ongoing economic challenges.
Additionally, the capital gains tax will increase from its current rates, with the basic rate jumping from 10% to 18%, and the higher rate rising from 20% to 24%. This adjustment reflects the government’s strategy to address the “£22bn black hole” in UK finances, which Reeves attributed to the previous administration’s policies.
Chancellor Reeves highlighted that the Office for Budget Responsibility forecasted consumer price inflation to average 2.5% for the coming year. She reassured the public by mentioning that fuel duties will remain frozen for 2025. This mix of measures is designed to restore economic stability and support various segments of the population without resorting to broad-based tax increases.
Chancellor Reeves’ budget seeks to balance financial challenges with targeted support measures.
