The UK Autumn Budget for 2024, set to be delivered on October 30 by Chancellor Rachel Reeves, is expected to focus on addressing a £22 billion fiscal shortfall. Here are some key forecasts:
- Taxation Changes:
- Capital Gains Tax (CGT): There is speculation about aligning CGT rates with income tax, which could increase them significantly. Other potential changes include reducing the CGT annual allowance or altering reliefs for business disposals.
- Inheritance Tax: Possible reforms could target raising more revenue from wealth-based taxes. However, Labour has pledged not to raise headline rates of income tax, national insurance, VAT, or corporation tax.
- Private Schools: VAT on private school fees and the removal of charitable business rate relief are expected to be introduced, which could raise significant revenue.
- Council Tax and Housing:
- There may be reforms to update council tax bands to reflect current property values, although changes to the single-person discount might also be considered.
- The current higher stamp duty threshold for first-time buyers will revert in 2025, but some groups are lobbying for further extensions or exemptions in the budget.
- Business and Energy Taxes:
- Labour will present a business tax roadmap, maintaining corporation tax at 25% and possibly extending the Energy Profits Levy. However, the government aims to incentivize long-term business growth while managing tough fiscal conditions.
Overall, while major tax rate increases on income and VAT are unlikely, targeted measures focusing on wealth and business taxation are expected to help fill the fiscal gap
Student Loans, April 2025
For student loan interest rates in the UK from April 2025, projections suggest they will vary depending on the loan plan.
- Plan 1 (pre-2012 loans): Interest rates are typically set based on the Retail Price Index (RPI) or the Bank of England's base rate plus 1%, whichever is lower. The current rate is 4.3% as of 2024. Given that inflation and the base rate are expected to remain stable, a similar rate might apply in 2025 unless significant economic changes occur.
The repayment threshold for Plan 1 loans will rise to £26,065 from 6 April 2025 to 5 April 2026.
- Plan 2 (post-2012 loans): Interest is tied to RPI, with graduates earning over the repayment threshold paying between RPI and RPI + 3%. The RPI for 2024 has been around 4.3%, and if inflation trends continue similarly, the interest rate for 2025 is likely to be in this range, potentially around 7% to 7.5%, depending on earnings.
The income threshold for repayment of Plan 2 loans will rise to £28,470 from 6 April 2025 to 5 April 2026
- Plan 5 (for students starting in 2023/24): This plan also tracks inflation (RPI), with current interest rates in 2024 around 8%. A similar rate may apply in early 2025 unless economic conditions alter drastically.
These forecasts are based on current inflation and interest rate trends, so if inflation remains stable or decreases, the rates may adjust accordingly
