A budget packed with announcements from taxes and spending to payments and pensions has been released by Finance Minister Rachel Reeves.
Much of what she said can directly impact you and your finances, so here’s what it means for you.
The minimum wage paid by employers will rise across the UK in April. It means:
The National Living Wage for employees aged 21 and over will rise from £11.44 an hour to £12.21 an hour.
If you’re 18, 19 or 20, the national minimum wage will rise from £8.60 to £10 an hour.
The minimum wage for 16- and 17-year-olds will rise from £6.40 to £7.55 an hour.
Separate apprenticeship rates, which apply to eligible people under 19, or who are over 19 in their first year of apprenticeship, will also rise from £6.40 to £7.55 an hour.
The rate of increase is smaller than the previous two years. However, the pace of price increases has now slowed.
In addition to the additional costs of paying employees under the minimum wage, many employers will have to increase their National Insurance (NI) contributions to cover more employees.
The NI paid by the employee remains unchanged.
But employers argue that the additional financial burden faced by employers could hurt their chances of getting a job or getting a raise.
Some may raise prices to cover costs.
The cap on one-way bus fares on many routes in England will rise from £2 to £3 in 2025.
Transport for London’s one-way bus fares will remain at £1.75 in London and £2 in Greater Manchester. This is because these cities have different funding systems.
Fuel taxes have been frozen since 2011 and will remain in place. The 5p per liter fuel tax cut has also been extended.
Inheritance tax (IHT) is currently 40% and is usually payable when the value of a deceased person’s assets exceeds the £325,000 threshold.
Currently, pension savings are not covered, but from April 2027 inherited pensions will also be covered.
This is likely to result in more estates being subject to inheritance tax due to pension savings that are not used up by the time someone dies.
Historically, various exemptions have allowed certain types of property, such as farms or family-run assets, to be ignored in inheritance. However, from April 2026, the rules will ensure that some tax is paid on assets over £1 million.
Capital gains tax (CGT) is levied on profits made from the sale of assets that have increased in value, such as holiday homes or investments.
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The Chancellor announced that CGT levy would rise from 10% to 18% for basic rate taxpayers and from 20% to 24% for those paying higher rates. This matches the property’s existing rates and will remain the same.
The much-debated labor policy has been officially announced. This means that VAT at a standard rate of 20% will be added to private school tuition fees from 1 January 2025.
How much additional money parents of privately educated children have to pay depends on each school’s decision. It is also very unlikely that you can avoid additional charges by paying in advance.
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The Prime Minister confirmed that benefit payments will increase by 1.7% in April, in line with inflation.
The most common benefit claimed by 7 million people (38% of them working) is Universal Credit. The increase is expected to see the standard allowance for single people under 25 rise by £5.30 a month to around £317. Couples aged 25 and over are likely to see a rise of £10.50 to £628 a month.
The total amount you can receive in Universal Credit will vary widely depending on your circumstances.
The Prime Minister said there would be a wide-ranging review of health insurance and disability benefits.
Caregivers will be able to earn more from their jobs before losing their benefits.
The national pension will be raised according to average income, and will rise by 4.1% in April. In other words,
The new fixed state pension (for people who reached state pension age after April 2016) will increase to £230.30 per week. That would amount to £11,975 a year, an increase of £473 compared to now.
The full old basic state pension (for people who reached state pension age before April 2016) is expected to rise to £176.45 a week. That would cost £9,175 a year, £361 more than it currently does.
However, it has previously announced that millions of pensioners will lose up to £300 worth of winter fuel bills as a result of the Government’s cuts.
The freezing of income thresholds payable at various tax rates will continue as planned.
There was speculation that this would be prolonged, but the prime minister denied this and said the standard would be raised in line with prices from 2028.
Until then, any raise you receive could drag you into a higher tax bracket or cause you to be taxed on more of your income than you would otherwise expect.
Scotland has its own income tax rate.
You may not have enough income to pay income tax, so you may end up paying more in VAT when you buy goods and services, but that hasn’t changed.
Those who avoid paying taxes will face higher interest rates when repaying.
