On 30 October 2024, Rachel Reeves stood in parliament and announced the Autumn Budget for the UK. For those who may not know, the Budget is a statement made by the Chancellor of the Exchequer to declare how the UK’s government finances will be divided, and the changes to taxation. It also includes the predictions for economic growth.
You may be thinking, “Oh how will this affect me? I don’t pay taxes”, et cetera. In a few years’ time, whether you are about to start driving lessons now or have just recently found your way around the school, we will all grow into working adults, where economic decisions made by the government will directly affect you, the taxpayer. Before you know it, you’ll be leaving education and venturing into the outside world, only to find yourself surrounded by bills (sorry for the reality check Year 13s).
The Labour government’s plan is to fix the country’s “broken” finances, with a £1 trillion revenue spread across different areas of government funding to rebuild departments like the NHS or education sector, as well as the cost-of-living crisis, which has been on a bloodthirsty spree for the past few years. Reeves hopes to combat it by increasing wages to match the rate of rising inflation.
Rachel Reeves is the first female Chancellor to hold the iconic red briefcase and announce the Budget: a win for us girls!
VAT on private schools
From 1st January 2025, all private schools will have to pay up to 20% VAT (value added tax) for certain goods and services they provide. This includes education and boarding fees but excludes supplies that are ‘closely related to education’ such as school meals (lunch during the school week), home to school transport, exam fees and stationery and textbooks. (This has yet to be confirmed in legislation or HMRC guidance).
This new legislation affects about 7% of all pupils, and around 2,500 private schools around the country. The government estimate that the policy is likely to raise in the region of £460 million next year, with the majority going to funding for state schools.
Minimum Wage
From 1 April 2025, the minimum wage will increase for all working ages as follows:
The National Living Wage (21+) will increase from £11.44 to £12.21, a 6.7% increase. This now totals up to £23,873 per year.
For young adults aged 18-20, the minimum wage will increase from £8.60 to £10.00, the largest increase on record for this age group (16.3%). For perspective, the yearly income for a minimum wage worker this age group will increase by £2,737.
Young people ages 16-17 and those working in apprenticeships will have an increase in minimum wage from £6.40 to £7.55.
Transport Fares
From 2 March 2025, your daily train fares will increase by 4.6% next year. In addition to that, most railcards will increase their price by £5. As the 16-25 railcard is one of the most popular across the nation, this will impact younger people more. This could mean that your railcard will cost £35.
The bus fare cap will also increase from £2 to £3, so the maximum you can spend on buses has increased. This may mean that your journey to school is a bit more expensive than usual.
Housing Prices
Since 2022, first-time house buyers were only charged ‘stamp duty’ (the tax when you buy a property) when the house costed more then £425,000. However, from April, the threshold will reduce to £300,000, mainly affecting those in the South of England. The stamp duty charge rate will also increase from 3% to 5%, which could increase house prices by £20,000
As well as this, landlords will have to pay a higher tax on their houses, meaning there will likely be a domino effect on higher rent for tenants.
This is the first Labour budget in 14 years, so naturally have been changes to the former Conservative announcements and it will be interesting to see how these changes pan out over the next year.
