Economic Stability and Taxation
The Budget introduces balanced tax measures to support public finances while protecting working people. Key tax changes include:
- National Insurance: The employer rate will increase by 1.2% from April 2025, while the Secondary Threshold (income level subject to NI) reduces, although small businesses are protected through a raised Employment Allowance.
- Capital Gains Tax (CGT): The lower CGT rate rises to 18%, and the higher rate to 24%, while residential property rates remain unchanged. Business Asset Disposal Relief will gradually increase from 10% to 18%.
- Inheritance Tax: Thresholds are fixed until April 2030, and from April 2027, inherited pension pots will be taxable. Agricultural and business property relief will adjust, with a 50% rate applying after the first £1 million, affecting the wealthiest estates.
- Alcohol and Tobacco Duties: Duties will rise with inflation, with alcohol duty reduced on certain draught products sold in pubs. New vaping duties will also apply from 2026.
- Business Rates: A 40% relief cap for retail and hospitality businesses is introduced, and the small business multiplier is frozen, supporting small businesses and high-street revitalization.