Chancellor's Budget sees taxes raised by £40bn as Reeves freezes fuel duty and announces Carer's Allowance shake-up

30 October 2024, 14:36 | Updated: 31 October 2024, 15:52

Rachel Reeves has announced £40bn in tax rises as part of the autumn Budget, with the Chancellor hiking employers' National Insurance contributions, freezing fuel duty and raising the minimum wage.

Labelling the £40bn rise announced on Wednesday a "difficult choice", Reeves said that “any chancellor standing here would face this reality".

As part of today's announcement, Reeves welcomed the landmark Budget - the first under the new Labour government and the first ever to be written by a woman.

"Let there be no ceiling on your ambition, your hopes and your dreams," she declared, adding she took “pride” in making the historic announcement.

As part of the autumn Budget, Reeves looks set to raise a hefty £25bn through employers' NI contributions.

Amid a host of tax hikes, the Chancellor also chose to knock a penny off a pint at the pub, raised Carer's Allowance and the National Living Wage, as well as injecting £226bn into the day-to-day running of the NHS.

The Chancellor also confirmed a notable increase in Capital Gains Tax as part of Wednesday's announcement.

It came despite fears she would seek to end the freeze to raise funds in the Budget, after she warned of a £22 billion.

Reeves' 2024 Budget - key points at a glance:

• Employers' NI contributions raised by 1.2% to 15%
• Freeze to Fuel Duty
• 1p off a pint at the pub
• National Living Wage to increase from £11.44 an hour to £12.21
• Carer's weekly earnings limit to rise from £151 to £181
• £22.6bn for NHS day-to-day operations
• Lower rate Capital Gains Tax will increase from 10% to 18%

As part of the budget, Rachel Reeves chose to extend the fuel duty freeze as part her announcement, allaying fears that motorists would have to pay higher taxes at the pump.

Ms Reeves said she would maintain the freeze on fuel duty, which has been in place since 2011, as well as maintaining for another year the 5p cut brought in by the Conservatives in 2022.

The Chancellor also increased employers' National Insurance contributions, with a 1.2% hike to 15% from April 2025, raising £25bn in total for the government.

Read more: Rachel Reeves extends fuel duty freeze at Budget as Chancellor vows 'no higher taxes at petrol pumps next year'

Read more: LIVE: Rachel Reeves reveals taxes will rise by £40bn as she vowed to 'invest, invest, invest' in historic budget

The Budget also saw Reeves raise the National Living Wage. Employees aged 21 and over will see wages rise from £11.44 an hour, to £12.21.

For those aged 16 or 17, the minimum wage will rise from £6.40 an hour to £7.55. Those aged 18-21 will also see National Minimum Wage go up, increasing from £8.60 an hour to £10 an hour.

Mayor of London, Sadiq Khan, said: "This historic Budget shows that we finally have a Government that understands the problems and opportunities London faces and is working with us here in the capital, not against us.

He also reflected on the announcement that HS2 will now terminate at Euston, describing additional funding for TFL as "fantastic".

“After all the dither and delay from the previous Government, confirming that HS2 will terminate at Euston will mean the capital can finally realise the full economic benefits of the project," he said.

“I am delighted that the Chancellor has announced additional money in London for social housing, schools and the NHS - public services that are in desperate need of investment.

"And the rise in the National Minimum Wage will be a real boost for thousands low-paid Londoners across the capital, as will new funding for breakfast clubs in our schools."

The markets' reaction to Reeve's budget was widely positive - with news of a penny off a pint leading Weatherspoon's share price to surge.

However, it's a Budget Rishi Sunak described as "broken promise after broken promise".

He added that it is "proof" that Labour planned to "tax, borrow and spend far beyond" what they announced during the general election.

"Today's Budget sees the fiscal rules fiddled, borrowing increased by billions of pounds, inflation-busting handouts for the trade unions," Mr Sunak said.

The Budget also heralded an increase to the weekly earnings limit for carer's, raising the Carer's Allowance from £151 a week to £181, Ms Reeves announced.

The move will mean 60,000 more carers will be eligible for the benefit - the largest increase since it was introduced in the 1970s.

It is the equivalent of 16 hours at the National Living Wage per week.

"I have heard representations from colleagues across this house about the Carer’s Allowance and the impact of the current policy on carers looking to increase the hours they work," Ms Reeves said.

Reeves also promised an injection of funding for the NHS as part of the plans, with an £22.6billion cash injection in its day-to-day health budget.

Health Secretary Wes Streeting told LBC earlier in the week that the NHS was set to be a key feature of today's budget.

"The chancellor has prioritised the NHS to root out waste and inefficiency," he confirmed to Nick Ferrari at Breakfast on Tuesday.

"All of our manifesto commitments, despite the challenges we’ve got, stand today," he said, adding: "I owe it to taxpayers that their money is well spent."

It comes as the government is set to publish a 10-year plan for the NHS in spring.

And where Capital Gains Tax is concerned, Reeves announced the lower rate of Capital Gains Tax will increase from 10% to 18%, with the higher rate rising from 20% to 24%.

The rates on residential property will remain at 18% and 24%.

CGT is charged on profits which are made from selling assets such as a second home or investments, including shares.

The rates depend on how much you usually pay in income tax, and how large the gain is.

Reeves £40bn rise in taxes is now thought to be the largest single tax increase at any budget since 1993.

The '93 Budget, under John Major's government, saw Ken Clarke raise takes and cut spending by the largest figure seen since the aftermath of the Second World War.