Breaking Down the Budget 2024

Here are the key points from the first Labour Budget, and specifically what it means for homeowners and renters

On Weds 30th October, Chancellor of the Exchequer Rachel Reeves, delivered her first Budget, the first by a female Chancellor and Labour’s first in 14 years, following the party’s return to power this summer. Ahead of the Budget, Reeves warned it would involve “difficult decisions” but there would be “no return to austerity”. 

What is the Budget?

Each year the Chancellor makes a Budget statement to the MPs in the House of Commons, outlining their plans for the economy, including raising or lowering taxation and spending on education, health, police and other public services. 

With her Budget, Reeves is planning to raise £40bn to plug the £22bn “black hole” in public finances and to stimulate growth. 

What are the main takeaways from this year’s Budget? 

In their pre-election manifesto, Labour promised no rises to income tax, national insurance or VAT to keep taxes low for “working people”. Reeves has said the thresholds for income tax and national insurance will increase in line with inflation in 2028-29. The biggest change is that employers’ national insurance contributions will be raised to 15% from April, so though employees won’t have to directly pay more, some fear that this could feed into lower wages, with Reeves admitting that it may mean smaller pay rises for workers as businesses look to save money. Those over-21s on the national living wage will see more money in their pockets as it’s increasing by 6.7% to £12.21. 

There will also be an increase in capital gains tax, with the lower rate rising from 10% to 18% and the higher rate rising from 20% to 24%. The threshold for inheritance tax, which allows people to inherit up to £325,000 tax free, is being frozen until 2023. The non-dom tax regime is being abolished from April 2025. 

There will be an increase in taxes on tobacco and vapes but 1p is coming off the duty for a pint of draught beer. The fuel duty freeze has been kept but air passenger duty will rise by up to £2 for each short-haul economy flight with the duty on private jets being raised by 50%. And in good news for Londoners, Reeves has promised £485 million for TfL’s renewal programme and confirmed that HS2 will run into Euston. 

Reeves has also promised an increase in spending on the NHS, education (along with VAT being added to private school fees in January), defence and housing.

How will the Budget affect the housing market?

Housing has been a key area for the Labour government, with Sir Keir Starmer pledging to build 1.5 million homes during the first five years in power, including an increase in the supply of affordable housing. Reeves announced a £5bn investment in housing pre-budget saying, “We need to fix the housing crisis in this country. It’s created a generation locked out of the property market, torn apart communities and put the brakes on economic growth.” Deputy Prime Minister Angela Rayner also added, “We have inherited a housing system which is broken, with not enough homes being built and even fewer that families can afford. This is a further significant step in our plan to get Britain building again, backing the sector, so they can help us deliver a social and affordable housing boom, supporting millions of people up and down the country into a safe, affordable and decent home they can be proud of.” 

As well as allocating £500 million in new funding for the Affordable Homes Programme, the government will also reduce right-to-buy discounts and allow local authorities to keep 100% of the earnings from the sale of council houses so they can reinvest. £230 million has also been provided to tackle homelessness and rough sleeping, something that’s of particular concern in London. 

In response, Cllr Grace Williams, London Councils’ Executive Member for Housing & Regeneration, said: “With London’s homelessness emergency posing the biggest threat to council finances in the capital, these announcements are hugely welcome news.

“Increasing investment in the Affordable Homes Programme and allowing councils to retain 100% of Right to Buy receipts will help boost the construction of much-needed social and affordable homes. Reducing the Right to Buy discounts will also better protect existing and newly-built council homes – a crucial resource in boroughs’ efforts to support families at the sharp end of the housing crisis. 

“The government is right to recognise the importance of putting social housing finances on a sustainable footing and the proposal for a new five-year rent settlement is a positive step. London boroughs face a black hole of £700m in their social housing budgets over the next four years as the costs of maintenance, repairs, and vital safety improvements outpace boroughs’ rental income.”

Reeves has also targeted the buy-to-let market by increasing the stamp duty on second homes and buy-to-let properties from 3% to 5%, arguing that “this will support over 130,000 additional transactions from people buying their first home, or moving home over, the next five years”. However commentators have warned that this could put a squeeze on the number of rental housing available, leading to potentially higher rents. 

The Chancellor is also ending the freeze on stamp duty thresholds so they will increase in March 2025. That means first-time buyers will be exempt from stamp duty up to £300,000 (a drop from current threshold of £425,000) as long as the total property price is no more than £500,000. With properties in London and the South East amongst the most expensive in the country – the average price sits around £680,000 – first-time buyers in the capital will be most affected by this change. 


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