What To Expect From The Autumn Budget 2024
The upcoming budget announcements are set to introduce significant fiscal measures addressing the UK's economic challenges and future growth strategies. Our overview examines potential changes, their implications for individuals and businesses, and key announcements already confirmed ahead of the Chancellor's speech.
When Is The Autumn Budget 2024?
Chancellor Rachel Reeves is set to deliver the highly anticipated Autumn Budget 2024 on Wednesday, 30 October. It is scheduled for 12:30 (UK time), with the Chancellor's speech expected to last about an hour.
As is customary in British parliamentary tradition, immediately following the Chancellor's address, the leader of the opposition, Conservative Party leader Rishi Sunak, will provide a comprehensive response to the Budget. This rebuttal offers an alternative perspective on the government's fiscal plans and economic forecasts.
The timing of this Autumn Budget is particularly significant as it marks the first major fiscal statement from the new Labour government. Economic analysts, business owners, and the public are eagerly awaiting the Chancellor's announcements, which are expected to outline strategic measures to address inflation, manage public spending, and stimulate economic growth in the face of ongoing financial challenges.
Potential Changes To Expect
The Autumn Budget 2024 is expected to include references to electric vehicle (EV) adoption, with expected changes including adjustments to company car tax and increased investments in public charging infrastructure. These developments could significantly reshape the landscape for both electric vehicle users and businesses.
Pensions
The autumn budget could bring significant changes to the pension landscape, potentially affecting both individuals and businesses. Chancellor Rachel Reeves is considering several reforms to address challenges while ensuring long-term economic sustainability.
One key area under scrutiny is pension tax relief. The current system, which offers tax relief based on the saver's income tax bracket, might be replaced with a flat rate of around 30% for all contributors. This change could impact higher earners, potentially altering their retirement savings strategies.
Another potential reform involves the tax-free lump sum. Currently, pensioners can withdraw 25% of their pension pot tax-free. However, there's speculation that this benefit might be capped or removed entirely, which could influence retirement planning for many.
For businesses, these changes could have far-reaching implications. Companies offering workplace pension schemes, including those with salary sacrifice arrangements, may need to reassess their offerings. The potential reforms could affect the attractiveness and cost-effectiveness of these schemes, prompting businesses to review their employee benefits packages. Salary sacrifice schemes, which have been popular for both pensions and benefits like electric company cars, might face new considerations. Employers may need to evaluate how changes to pension tax relief could impact the overall benefits of such arrangements for both the company and employees.
Fuel Duty
The autumn budget is also expected to address the contentious issue of fuel duty, a topic that has significant implications for both consumers and businesses across the UK. The aim is to balance environmental goals with economic pressures in this area.
Fuel duty has been frozen since 2011 and was temporarily cut by 5p in 2022 to alleviate rising living costs. However, the Office for Budget Responsibility (OBR) has warned that maintaining this freeze could cost the Treasury up to £15 billion by 2029. This substantial revenue loss is likely to be a key consideration in the Chancellor's decision-making process. There's speculation that the government might increase fuel duty to address both fiscal and environmental concerns. Such a move would align with Labour's commitment to sustainable economic growth and could potentially fund investments in green infrastructure, including the expansion of public charging points for electric vehicles.
For businesses, especially those reliant on transport and logistics, any increase in fuel duty could significantly impact operational costs. This might accelerate the transition to electric and hybrid vehicles, particularly when combined with potential changes to company car tax and investments in charging infrastructure. There's growing speculation about the potential introduction of a pay-per-mile road pricing system, which could serve as an alternative measure to traditional fuel taxation, particularly as the UK transitions towards electric vehicles.
Consumers, already grappling with inflationary pressures, may face higher costs when filling up their car if fuel duty increases. This could further incentivise the shift towards electric vehicles, aligning with our mission at The Electric Car Scheme to make EVs more accessible through salary sacrifice.
Company Car Tax
The Chancellor of the Exchequer is likely to address company car tax, potentially impacting businesses and employees who use or provide company vehicles. In recent years, the government has been incentivising the adoption of electric and low-emission vehicles through favourable company car tax rates.
Here's what business owners should be aware of:
Potential Changes Include:
Adjustments to Benefit-in-Kind (BiK) rates for electric vehicles,
Possible increases in BiK rates for higher-emission vehicles,
Introduction of new tax bands to further encourage ultra-low emission vehicles.
Electric Cars:
The current 2% BiK rate for pure electric cars might be reviewed,
Any changes could affect the attractiveness of salary sacrifice schemes for EVs.
Implications For Businesses:
Review your fleet and future vehicle policies,
Consider accelerating the transition to electric or hybrid vehicles,
Evaluate the impact on employee benefits and recruitment strategies.
Salary Sacrifice:
Changes to company car tax could affect the cost-effectiveness of salary sacrifice schemes,
Stay informed about potential adjustments to maximise benefits.
Public Charging Point Infrastructure
The upcoming announcement is set to reinforce the UK's commitment to expanding EV charging infrastructure, building on the government's strategic shift from vehicle incentives to charging point development. This pivot was initially signalled in June 2022 with the closure of the grant scheme for new electric cars and further solidified after the 2022 Autumn Statement, which legislated to end the Vehicle Excise Duty exemption for electric vehicles from 2025.
Labour's pledge to support rapid expansion of EV charging networks could translate into increased funding for public charging points, tax incentives for workplace installations, and support for local authorities to boost on-street charging options. This approach aims to address 'charging deserts' and create a more equitable nationwide distribution.
For businesses, these measures present opportunities in the EV charging sector and could make fleet electrification more viable. Companies should consider how improved charging infrastructure might influence their fleet strategies and employee benefits packages, such as those offered through The Electric Car Scheme.
Corporate Tax
The Autumn Budget 2024 is not expected to bring major changes to the headline corporate tax rate, which currently stands at 25%. However, business owners should remain alert to potential adjustments in tax reliefs and allowances that could impact their bottom line.
Chancellor Rachel Reeves has committed to publishing a roadmap for business taxation on Budget Day, which should provide clarity on the government's long-term plans. This roadmap may include:
Potential reforms to research and development tax credits,
Changes to investment allowances,
Adjustments to the size threshold for SMEs to reduce administrative burdens.
While Labour has pledged not to increase the main rate of corporation tax, they may look at other ways to boost revenue or incentivize certain business behaviours. This could include targeted reliefs for green investments or changes to how international profits are taxed.
While the headline corporate tax rate is expected to remain stable, businesses should be alert to potential changes in employer National Insurance contributions. The current main rate stands at 13.8% for earnings above £175 per week. Speculation suggests the government might adjust these thresholds or introduce targeted relief for specific sectors or types of employment, potentially to encourage job creation or support industries crucial to economic recovery.
What’s Already Been Announced?
Several key financial measures have already been confirmed ahead of the Autumn Budget 2024:
Winter Fuel Payments: Future payments will be restricted to those receiving pension credit or other means-tested benefits, a move that has faced criticism from various quarters.
State Pension: A 4% increase is set for April 2025, with official confirmation expected around Budget time from Work and Pensions Secretary Liz Kendall.
Private School Fees: VAT will be applied to private school fees starting 1 January, alongside the removal of business rates relief for some institutions.
Energy Windfall Tax: The energy profits levy on UK oil and gas firms will increase from 35% to 38% on 1 November, extending until 31 March 2030.
These pre-announced measures provide a glimpse into the government's fiscal priorities, balancing social welfare adjustments with revenue-raising initiatives across different sectors.
The government’s tax incentives for electric cars encourage sustainable choices; however, they can be complex and difficult to navigate. The Electric Car Scheme simplifies access to these incentives, facilitating the transition to net zero. Through salary sacrifice, employees can save 30-60% on the cost of any electric car by paying from their pre-tax salary. This scheme serves as an excellent employee benefit for companies, enhancing employee satisfaction and fostering a sense of value within the workforce.
