Autumn Budget 2024 Policy Paper: Key Highlights, Impacts, and Analysis

MA & CO Accountants Potcast

Introduction

The Autumn Budget 2024 was recently announced by the UK government. This budget is very important because it helps decide how money is spent on things like health, education, and public services. The budget is also designed to help people facing high living costs. Let’s explore what this means for everyone.

The Autumn Budget focuses on three main areas:

  • Helping with the cost of living.

  • Supporting businesses and public services.

  • Ensuring the government manages public spending and debt effectively.



Fiscal Policy Highlights

The government has several important fiscal policies to manage how money is spent:

  • Public Spending Announcements: The government has promised to allocate more money to the NHS and schools. This means more doctors, shorter wait times at hospitals, and better facilities in schools.

  • Debt Reduction Rules: New rules were established to reduce the amount the government owes, also known as national debt. This will help make sure the country’s finances stay healthy.

The government plans to spend money wisely while also keeping an eye on reducing debt and public borrowing.

Cost of Living and Household Support

The cost of living is going up, and this budget aims to help people manage:

  • Household Support Fund: The government added more money to this fund to help people pay for essential things like food and bills. This fund was extended to September 2024 with an estimated cost of £500 million.

  • Increase in Benefits and Pensions: Benefits will increase by 10.1%, and pensions will also go up. This helps people get more money to deal with rising prices.

  • National Living Wage: It will go up by 9.7%, giving low-income workers a significant boost.

The Local Government Association is also helping by giving more support to families facing challenges with higher bills and rent.

Taxation Policies

There are some changes to taxes that are important to know about:

  • Income Tax Changes: The threshold for people paying the highest tax rate has been lowered. This means more people will now pay the top rate of tax.

  • Capital Gains and Dividends: There are changes to capital gains and dividend tax allowances. The allowances are reduced, which may mean people will pay more tax on profits made from investments.

  • Energy Profits Levy: Energy companies that have made large profits will pay extra taxes. This is to ensure they contribute since high energy prices affect everyone.

These measures are aimed at raising around £25 billion to support public services and reduce the deficit.

Support for Businesses

Businesses will also get help to deal with their challenges:

  • Business Rate Relief: The government is providing £13.6 billion for business rate relief. This means businesses will pay less in rates, especially those struggling after the pandemic.

  • Transitional Relief Scheme: A £1.6 billion scheme was announced to help businesses that are facing changes due to property revaluation.

  • R&D Investment: The budget will support research and development (R&D) to encourage new ideas and inventions. This will make businesses more competitive in the future.

To learn more about how your business can benefit from government support, check our guide on tax support for small businesses at MA & CO Accountants.

Public Services Investments

The Autumn Budget 2024 also focuses heavily on improving public services like health and education:

  • NHS and Social Care: The government added £8 billion for NHS and social care. This money will help reduce waiting times and provide better health services for everyone.

  • Schools Funding: £2.3 billion more will go to schools, ensuring each child gets better support and education.

  • Infrastructure Projects: Money is also being invested in big projects like the Sizewell C nuclear plant, High Speed 2, and Northern Powerhouse Rail. These projects aim to boost the country's infrastructure and make it easier for people to travel.

Investing in public services helps improve the overall quality of life for everyone in the country.

Welfare Reforms and Employment Support

This budget has also set aside money to help more people find jobs and move off welfare:

  • Back to Work Plan: £2.5 billion will be invested in getting people with health issues and disabilities back to work. This program will provide extra support to help people return to employment.

  • Local Housing Allowance: Local Housing Allowance is being increased to help people pay rent. About 1.6 million households will be £800 better off per year due to this support.

  • Welfare Reforms: Working-age benefits are being raised by 6.7%, which will ensure people can keep up with higher living costs.

The government also announced more mental health support for job seekers through programs like NHS Talking Therapies, which will help almost 500,000 people over the next five years.

Sector-Specific Analysis

Here are some changes for specific sectors in the UK:

  • Energy and Environment: The government will continue to fund programs that focus on renewable energy and energy efficiency. The Energy Profits Levy is aimed at balancing out the extra profits that energy companies have made.

  • Housing Market: Changes in taxes on furnished holiday lettings and new policies to support affordable housing are also part of the budget. The goal is to help people who rent and make housing more affordable.

  • Climate Action: Councils are also working on climate and environmental initiatives. These are meant to reduce the effects of climate change and help protect our environment.

Economic and Fiscal Impact Assessments

The government expects the following impacts from the budget:

  • Revenue Generation: The changes in taxation are expected to raise £25 billion by 2027-28. This money will help fund public services and reduce the deficit.

  • Inflation Control: The government is also working to control inflation, which has been very high. This includes keeping an eye on public sector pay and managing borrowing.

  • Debt Management: The new fiscal policies are aimed at reducing debt to keep the economy stable. This means keeping public sector borrowing below 3% of GDP.

Case Studies from Local Authorities

The Local Government Association has also shared some case studies that show how local councils are helping people in different ways:

  • Cost of Living Support: Councils are providing extra support to help residents with rising bills, including offering food banks and energy-saving advice.

  • Homelessness: Councils are working hard to support those at risk of homelessness. This includes offering temporary housing and rent support.

  • Adult Social Care: Local councils are working to improve the health and independence of older adults. Programs are focused on keeping people safe and improving their quality of life.

  • Climate Initiatives: Councils are taking action to reduce carbon emissions and encourage recycling as part of their climate action plans.

FAQs

Q1: How does the Autumn Budget help with the cost of living?

A: The Autumn Budget helps by increasing benefits and pensions, raising the National Living Wage, and adding money to the Household Support Fund. This is to help people deal with rising costs like food and bills.

Q2: What support is there for businesses?

A: Businesses will get rate relief and transitional support worth £13.6 billion. The government is also investing in R&D to help businesses grow.

Q3: How does the budget help public services?

A: More money is being allocated to the NHS and schools. Infrastructure projects like Sizewell C and High Speed 2 will also be funded to improve public services.

Q4: What changes in taxes are happening?

A: The highest income tax threshold has been lowered. There are also reductions in allowances for dividends and capital gains, meaning people may pay more tax on investments.

Q5: How is welfare being improved?

A: The government is investing £2.5 billion to help people with health issues get back to work. Benefits are also being increased, and mental health support programs are being expanded.

Conclusion

The Autumn Budget 2024 is designed to help the UK grow economically while also ensuring people get the support they need. There is a strong focus on helping families, supporting businesses, and improving public services. However, there are also challenges, like dealing with high inflation and keeping public finances in check. By investing in infrastructure, health, and education, the government aims to create a stable future for everyone.

For more information on how these changes might affect you or your business, check out our detailed guides on tax support for individuals and financial planning for businesses at MA & CO Accountants.

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