Autumn Budget 2024: Key Takeaways for UK Contractors

We round up the key takeaways for contractors from the Autumn Budget 2024.

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Yesterday afternoon, Rachel Reeves, the first female to hold position of Chancellor of the Exchequer in its 803-year history, delivered Labour’s first Budget in almost 15 years. In her opening statements, Reeves said that her ‘belief in Britain burns brighter than ever,’ and she promised ‘more pounds in people’s pockets.’

After this budget, Reeves aims for more money in the government’s pockets too – to the tune of £40bn. So, where is this money coming from and how will it affect contractor workers?

Key takeaways - Autumn Budget.

Contractor tax changes 2024/25

Income Tax: No change until April 2028

Income Tax is a tax someone pays on their income, but not all types of income. A full overview can be found here. The threshold for paying income tax is currently:

  • £0 – £12,570: 0%
  • £12,571 – £50,000: 20%
  • £50,271 – £125,140: 40%
  • £124,140 and over: 45%

These thresholds were frozen in April 2021 and the previous government said they would stay the same until April 2028. After this, Reeves said the thresholds will rise in line with inflation.

National Insurance: No change for employees

Similar to Income Tax, National Insurance is a tax on earnings and self-employed profits. Someone would normally start paying National Insurance contributions when they turn 16 and earn over a certain amount. National Insurance pays for benefits when people retire, are sick or are unemployed. A full explanation of National Insurance and how much you pay can be found on the .gov website here.

Similar to Income Tax, the thresholds for when someone pays National Insurance will remain frozen until April 2028.

If you’d like to know more about deductions visible in your payslip as a contractor worker, you can see a breakdown with explanations here.

Contractor wage rises

Wages: A rise in the minimum wage

The Budget provided good news to those who are on a minimum wage. It was announced that the national minimum wage is going to be increased by 6.7%. This means that those workers ages 21 and over will earn at least £12.21 an hour. This means for someone working a 35-hour week, their minimum annual salary will change from £20,820.80 to £22,222.20 – an increase of just over £1,400.

Those aged between 18-20 will see wages rise from £8.60 per hour to £10 per hour, giving them an extra £2,500 if they work full-time.

Contractor pension changes

State Pension: Confirmed to rise by 4.1%

The Chancellor confirmed that boy the old (basic) and new State Pension are set to rise by 4.1% on 6th April 2025 under the ‘triple lock’ guarantee. This means that:

Those on the full New State Pension will see their weekly pension rise from £221.20 per week to £230.25.

Those on the Old State Pension will see a weekly rise from £169.50 to £176.45.

As an employee of our umbrella company, you can make pension contributions via our salary sacrifice scheme, including through our partners at Interactive Investor. You can listen to Interactive Investor’s take on the Budget here.

Housing changes

Stamp Duty raised for those buying a second home

Stamp Duty is a tax that must be paid if you buy a property or land over a certain price in England and Northern Ireland.

In the Budget, The Chancellor revealed that Stamp Duty rates will be increasing for those buying a second home/additional property in England or Northern Ireland. Before the budget, they were three percentage points higher than standard Stamp Duty rates. From 31st October 2024, they will be five percentage points above standard rates.

Right to Buy discount cut

The Right to Buy scheme allowed some council and housing association tenants in England to buy their homes at a discounted price. These discounts are currently capped at £102,400 or £136,400 if you live in London.

From 21st November 2024, this discount will be cut to £16,000 or £38,000 for homes within London.

Please note, this only applies to homes in England. For a full breakdown of the Right to Buy scheme, you can visit the .gov website here.

If you’re a contractor worker looking for a mortgage, we have partnered with Cleerly who provide specialist contractor services. You can find out more about them here.

Money for more affordable social homes

The Chancellor announced that £500 million of funding will be put towards 5,000 new affordable social homes.

The government also announced that they will consult on a new five-year social housing rent settlement, which would cap the rent that social housing providers in England can charge tenants. This cap on social rent rises in England is currently set at 7.7%.

Autumn Budget 2024: Impacts on lifestyle

Fuel: Duty to remain frozen

The Chancellor announced that the freeze on fuel duty will remain in place. Had it not, she said that the price of petrol would have gone up by 7p a litre.

With our exclusive rewards platform, Umbrella Rewards Pro, contractor workers can save even more on fuel with a free bp Plus Fuel Card. You can find out more about Umbrella Rewards Pro and its other benefits here.

The NHS

NHS England is to receive a £22.6bn cash injection over two years. This is the biggest spending increase on the NHS outside Covid since 2010. The Chancellor said this should help fund thousands of additional beds, bring waiting lists down more quickly and help bring waiting times to be no longer than 18 weeks.

In its manifesto, Labour promised an additional 40,000 hospital appointments a week.

Travel

The headline announcement around travel in the Autumn Budget was that the bus fare cap is extending, but that it will be rising from £2 to £3.

The current cap of £2 for a single fare bus journey was introduced in January 2023, excluding London where the cap is £1.75.

It was originally intended to run for just three months between January and March but was extended in increments up until the end of 2024. The Chancellor announced that the cap will be extended until the end of 2025, but that it will increase to £3 from 1st January.

Smoking and vaping

From 6pm on October 30th, the average price of a pack of 20 cigarettes will increase by 54p. A pack of 30g hand-rolling tobacco will increase by £2.32.

From 1st October 2026, vaping products will be taxed at a rate of £2.20 per 10ml of vaping liquid.

Alcohol

In a welcome move to those who enjoy a refreshing pint at the end of the working day, the price of draught beer will be cut by 1.7% from 1st February 2205. This will mean an average reduction of 1p per pint.

Key Changes in Autumn Budget 2024

Overall, the Autumn Budget delivered a mixed picture for contractor workers. While certain tax rates and regulations remain stable, there is an anticipation of further reviews and possible future adjustments that could redefine contracting and freelancing landscapes in the UK.

Here at Umbrella.co.uk, we continue to keep abreast of these legislative changes around employment status and IR35, and reiterate our commitment of staying 100% compliant with any such changes.

Get in touch

If you’d like to know more about our payroll solutions, or umbrella companies in general, you can get in touch with our team by emailing: info@umbrella.co.uk or giving us a call on 01625 546 610.

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