Wealthify UK Autumn Budget Reaction

Following the release of the UK Autumn Budget as markets are digesting the announced policy and tax changes, our Junior Investment Analyst, Harry Dyer, explores the potential implications.

By Harry Dyer

Created on: 01/11/2024

Reading time: 4 mins

In one of the most anticipated Autumn Budgets in recent memory, Chancellor of the Exchequer, Rachel Reeves, delivered what many predicted: a focus on the UK’s economic stability, public finances, and growth.

In case you missed it, let’s start with a quick recap of the key takeaways from this year’s announcement that are most likely to affect you or your plans.

Budget summary 2024

Tax changes played a huge part in this Budget, with increases amounting to £40bn announced to support public finances and invest in public services.

However, income tax rates, National Insurance (NI) paid by employees, and VAT all remain unchanged — which is good news for many people.

Additionally, income tax bands are set to rise with inflation after 2028, meaning people are less likely to be pushed into higher tax brackets as their wages rise. This also comes with a rise in the national minimum wage by 6.7% from April 2025.

Capital Gains Tax (CGT) has already increased though; from 10% to 18% at the lower rate, and 20% to 24% for the higher rate. This only applies if you have a Wealthify General Investment Account (GIA), as you don’t have to pay CGT within an ISA (Individual Savings Accounts).

There were also a number of tax changes affecting businesses, the main one being an increase on NI payable by employers. From April 2025, companies will pay 15% on salaries above £5,000 (up from 13.8% on salaries above £9,100).

The Employment Allowance – which allows smaller businesses to decrease the NI they have to pay – will also see an increase from £5,000 to £10,500.

Market Reaction

Despite an initial rally from UK government bond yields and the FTSE 250 [1] – which shows the performance of smaller UK companies – Thursday told a different story, as the pound fell and UK government bonds experienced a sell-off [2].

Whilst there was an increase in CGT, it was than expected [3] — and good news for UK shares, as a result.

Additionally, the Office for Budget Responsibility (OBR) predicts the UK economy will grow by 1.1% this year, 2% in 2025, and 1.8% in 2026 [4]; numbers that could boost short-term investor confidence.

The longer-term outlook is more uncertain, with the OBR describing this Budget as unlikely to promote economic growth over the next 5 years.

Wealthify Investment Plans

If you have an Investment Plan with Wealthify, rest assured that only part of your money is invested in UK equities and bonds.

The rest is well diversified across different markets, including the US, other European countries, and emerging markets. Even in the event of a downturn in UK markets, this diversification may well help.

Whilst it’s natural to be nervous about big financial events such as this, it’s important to look past any short-term volatility that may have been created.

After all, time in the market is a mantra you’ll often hear — and the focus must always be kept on the long-term.

Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.

With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.

Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.

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