Tax, wages and prices – what the Budget means for you and your money

Chancellor Rachel Reeves announced a budget packed with announcements ranging from tax and spending to wages and pensions.

Much of what she says may directly affect you and your finances, so here’s what it means to you.

minimum wageWages paid by employers are set to rise across the UK in April. This means:

• The National Living Wage for employees aged 21 and over will rise from £11.44 to £12.21 an hour
• If you are 18, 19 or 20, the national minimum wage will rise from £8.60 to £10 an hour
• For those aged 16 or 17, the minimum wage will rise from £6.40 to £7.55 an hour

Individual apprenticeship rates for qualified persons under 19 years of age or those aged 19 and over in the first year of an apprenticeship will also increase from £6.40 to £7.55 per hour.

In percentage terms, the increase was smaller than in the previous two years. However, prices are currently rising at a slower pace.

In addition to the additional cost of paying employees at minimum wage, many employers must also pay higher wages Contribution to National Insurance (NI) reach more of the people they employ.

The NI paid by employees will not change.

But businesses say your chances of finding a job or getting a raise may be affected as employers face additional financial burdens.

Some may raise prices to cover costs.

this One-way bus fare cap Fares on many routes in England will rise from £2 to £3 by 2025.

One-way bus fares will remain at £1.75 for TfL and £2 for Greater Manchester because the funding systems in these cities are different.

fuel tax It has been frozen since 2011 and will continue to be so. The 5p per liter fuel tax break has also been extended.

inheritance tax (IHT) is currently 40% and is usually payable on the value of the deceased’s assets in excess of £325,000.

Currently, any money saved in pensions does not count towards this amount, but from April 2027 inherited pensions will.

As pension savings have not been spent before someone dies, this may bring more of the estate into the inheritance tax net.

Until now, various exemptions have allowed certain types of property, such as farms and family business assets, to be ignored for inheritance purposes. However, from April 2026, the rules will ensure that some tax is paid on assets over £1 million.

capital gains tax (CGT) Charge on profits from the sale of an asset that appreciates in value, such as a second home or investment.

The Chancellor announced that the capital gains tax rate will be increased from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. This will be consistent with existing property rates.

The much-watched labor policy was officially announced, which means that a 20% value-added tax will be levied at the standard rate. private school tuition Effective January 1, 2025.

This means how much extra fees parents of privately educated children have to pay depends on the decisions of individual schools. They are also less likely now to avoid additional fees by paying in advance.

Chancellor confirms amount received benefit April will rise 1.7%, in line with inflation.

The most common benefit claimed by 7 million people (38% of whom are in work) is Universal Credit. The rise means the standard allowance for a single person under 25 is expected to increase by £5.30 a month, to around £317. For a couple aged over 25, the increase could be from £10.50 to £628 per month.

The total amount you receive on Universal Credit depends largely on your circumstances.

The Chancellor said there would be a wide-ranging review of health and disability benefits.

Caregivers will be able to earn more at work before losing their allowance.

this state pension In line with average earnings, April grew 4.1%. this means

• The new full flat state pension (for those reaching state pension age after April 2016) is expected to increase to £230.30 per week. This would make £11,975 a year, an increase of £473 on now
• The full old basic state pension (for those who reached state pension age before April 2016) is expected to rise to £176.45 per week. This would make £9,175 a year, £361 more than now.

But it was previously announced that millions of pensioners will lose their pensions Winter fuel costsValue up to £300 due to government cuts.

one Freeze income threshold Income tax will continue to be paid at different rates as planned.

There had been speculation that the deadline would be extended, but the chancellor ruled that out and said that from 2028 the threshold would rise in line with prices.

Until then, any kind of raise could drag you into a higher tax bracket, or a higher-than-expected portion of your income would be taxable.

Scotland has its own income tax rates.

Your income may not be enough to cover income tax, so you may be hit harder by VAT paid on purchases of goods and services, which remains the same.

Anyone who evades taxes will face higher interest rates when they repay their taxes.