Budget 2024: Everything Rachel Reeves will announce – together with rumours and predictions

Rachel Reeves will deliver the first Labour Budget in nearly 15 years within a matter of hours.

The Chancellor vowed to “fix the foundations” after the Tories left public finances in disarray. It is a critical moment for the new Government to set out its plans on tax and spending, with Keir Starmer saying it will be a “landmark” week for Britain.

Ms Reeves is expected to raise some taxes – to fill the £22billion blackhole she said the government inherited from the Conservatives. But she will also promise to fix public services such as the NHS and pour billions of pounds into the health service to cut waiting lists.

Mr Starmer insisted there will be no “short cuts” in rebuilding Britain after 14 years of Tory rule – but promised the country “better days are ahead”. In a major speech this week, the PM said: “We are turning the page on Tory decline, closing the book on their austerity and chaos. Those days are done, they are behind us, change is here.”

Here The Mirror looks at what we know from the Budget already and what could be in it as the Chancellor adds the finishing touches.

What we know is in the Budget so far?

NHS funding

Billions of pounds will be set aside for the NHS in an attempt to slash waiting lists. The Chancellor has prioritised fixing the crisis-hit health service as Treasury insiders warned it faces a £9billion black hole without extra funding.

The exact figure will be revealed at the Budget on Wednesday but the government has already announced £1.5billion for new surgical hubs and scanners to help free up capacity in the NHS. An extra £70million will also be set aside for new radiotherapy machines.

Ahead of the Budget, Ms Reeves said: “Our NHS is the lifeblood of Britain. It exemplifies public services at their best, there for us when we need it and free at the point of use, for everyone in this country. That’s why I am putting an end to the neglect and underinvestment it has seen for over a decade now.Billions of pounds will be set aside for the NHS in an attempt to slash waiting lists – a key priority for the new Labour government.

Bus fare cap being hiked – but new cash for services

Keir Starmer confirmed on Monday that the £2 bus fare cap across England will rise to £3.

He was quizzed by The Mirror following concerns that the measure – which saves some passengers over £10 per trip – could be scrapped altogether. The Lib Dems responded by branding the rise a “bus tax”.

The Department for Transport (DfT) said the cap – which was due to expire in December – is being funded by £151million from the Government until the end of next year. On top of that, an additional £925million will be pledged to improve bus services across the country during the 2025/26 financial year.

This brings the total funding to be announced on Wednesday to over £1billion. Local authorities will be able to use the extra money to bring in new bus routes, make services more frequent and protect crucial services for local communities.

Major tweak to borrowing rules

The Chancellor will tweak debt rules she inherited from the Tories in order to invest billions in major infrastructure projects, such as schools, hospitals and railways.

Speaking in Washington DC last week she said without the change the UK would be forced to continue on the “path of decline”. She said: “I don’t want that path for Britain when there are so many opportunities in industries from life sciences to carbon capture, storage and clean energy to AI and technology, as well as the need to repair our crumbling schools and hospitals.”

The major change in rules, which could free up around £50billion, cannot be used for day-to-day government spending such as public sector pay.

VAT, National Insurance and Income Tax for ‘working people’

During the election Keir Starmer made a vow not to increase taxes on “working people”.

The party’s manifesto stated: “We will not increase National Insurance, the basic, higher or additional rates of Income Tax, or VAT”. Don’t expect any of these rates to change at the Budget on Wednesday.

But the Chancellor is considering extending the freeze on income tax thresholds – first introduced by the Tories – which could push more people into paying higher rates. Thresholds normally rise in line with inflation but Rishi Sunak imposed a freeze in 2021 to claw back cash after the Covid pandemic. It means more people are dragged into paying income tax – and higher earners can end up moving to another tax band.

£240million fund to get people back to work

The Prime Minister has confirmed that £240million will be spent on local services to get people back to work.

In a speech on Monday Mr Starter said: “As a Labour government we will always help those who cannot support themselves, but the UK is the only G7 country where economic inactivity is still higher than it was before Covid.

“That is not just bad for our economy, it’s also bad for all those who are locked out of opportunity. So the Chancellor will announce £240 million in funding to provide local services that can help people back into work, and the dignity it brings.”

VAT private school fee loophole to shut

This was a key Labour pledge in the build-up to the General Election.

The Government wants to introduce VAT on school fees in order to fund extra teachers across England. It is expected the move will raise £1.5billion, according to the Institute for Fiscal Studies (IFS) think-tank.

This is enough to pay for 6,500 much-needed teachers across the country’s state schools. At the moment there is an exemption on the 20% VAT charge for private school fees.

But critics warn it could cause an exodus by parents who have to pay hundreds of pounds more. Rachel Reeves will announce that military families will be exempted.

End to non-dom status

Non-dom tax status has been contentious for years.

It caused a massive furore when it emerged Rishi Sunak’s wife Akshata Murty used it, potentially saving millions of pounds as a result. A non-dom only pays UK tax on money they earn in this country.

This grants them an exemption on overseas earnings – a legal entitlement the Government vowed to change. Labour’s manifesto pledged to use the extra cash to help fund 40,000 more NHS appointments per week.

What else could be in the Budget?

National minimum wage

The Chancellor could hike the minimum wage by more than 6% – giving over a million low-paid workers a boost in their wages from next year. The current national minimum for over 21s – referred to as the “national living wage” – stands at £11.44. Earlier this year the Low Pay Commission suggested this should increase to £11.89.

But according to reports, it could increase to more than £12.12 an hour after ministers promised to “raise the floor” on wages. Workers between 18 and 20, who currently receive £8.60 an hour, could be in line for a bigger hike under government plans for a single adult rate.

Tax rises for businesses

The Prime Minister and the Chancellor have both given strong signals that the Government could hike national insurance for employers in the Budget. It has been widely speculated that the 13.8% rate paid by employers’ could be hiked by one to two percentage points. Raising the rate by 1p would raise around £8.5billion for the Treasury.

Mr Starmer and Ms Reeves have refused to say their manifesto promise not to raise taxes on “working people” extends to employers’ national insurance contributions (NICs). Employers’ NICs do not come out of an employee’s salary but are paid on top.

NICs are not charged on other income sources like savings, pensions or property. At one stage it was rumoured that Ms Reeves was looking at changing the rules so that employers have to pay NICs on the money they put into their workers’ pensions schemes but it is now thought that she has decided against this after warnings it could impact people’s pensions.

Capital gains tax

Rumours have been swirling that Labour could hike capital gains tax (CGT) since the election. CGT is a tax you pay when you sell an asset which has increased in value. It applies to things such as second homes or shares not held in individual savings accounts (ISAs), but not to your main home as long as you’ve always lived there.

On his recent trip to Samoa Mr Starmer signalled he could increase taxes on people who get their money from property and shares as he said they “wouldn’t come within my definition” of working people. It has been speculated that the higher 20% rate of CGT is likely to be increased on the sale of shares and other assets – but not on second homes.

Inheritance tax

It has been speculated for some time that Ms Reeves is looking at changing the rates of inheritance tax. She is said to be considering an increase in the 40% rate of inheritance tax, as well as considering limiting some of the relief or exemptions on certain inherited assets.

Inheritance tax is charged at a 40% rate and applies to people who have an estate worth £325,000. This rises to £500,000 if a home is given to a child or a grandchild – meaning a couple have a combined tax-free property limit of £1million when they die. According to Government figures, just 3.7% of all deaths in 2020-21 resulted in an inheritance tax charge.

Stamp duty

Housebuyers are likely to see stamp duty go up next year after the move was intensely speculated. Stamp Duty is a tax paid when you buy houses, flats and other land and buildings over a certain price in the UK.

Currently housebuyers don’t pay the tax if the property they are buying is worth less than £250,000, or £425,000 for first-time buyers. But it has been rumoured these thresholds would go down to £125,000 and £300,000. This was due to happen anyway in March 2025 but the Chancellor is mooted to confirm this at the Budget.

Labour is also understood to be keeping to its manifesto pledge to increase stamp duty for non-UK residents, from 2% to 3%.

Fuel duty

Rumours have surfaced that Ms Reeves is looking at ending the 13-year freeze on fuel duty. On Monday, at his pre-Budget Mr Starmer dodged a question asking him to commit to keep fuel duty frozen.

The Chancellor is also understood to be considering ending the temporary 5p cut in fuel duty next year, which was introduced following Russia’s invasion of Ukraine. The RAC, who would usually be against a rise in fuel duty, has admitted that drivers have not felt the benefit of the cut as sellers have not passed on lower prices to them, instead focusing on boosting their own profits.

Vape tax

Ms Reeves is said to be looking at changing plans to bring in vape taxes that vary depending on the product’s nicotine strengths. She is said to be considering imposing the same rate of tax across all nicotine strengths – as well as increasing it.

The Tories introduced a new “excise duty” on vaping products, which is due to come into force from October 2026. The price rise depends on how much nicotine is in the e-liquid, with a 10ml bottle of nicotine-free e-liquid to go up by £1 compared to a bottle with 11mg or more of nicotine to increase by £3. But anti-smoking campaigners warned the tiered system may put off smokers who need high strength nicotine products to help them quit.

What’s not expected to be in the Budget?

Two-child benefit limit cut

The Chancellor is not expected to scrap the controversial two-child benefit limit introduced by the austerity-era predecessor George Osborne. The policy, which prevents people from claiming Child Tax Credits or Universal Credit for more than two children, has been blamed for trapping kids in poverty.

Despite repeated pleas from both Labour MPs and dozens of charities, the government has claimed it cannot afford to scrap the policy. Instead, ministers are expected to review it as part of a child poverty strategy being published in spring 2025.

Winter fuel payment U-turn

This has probably been the most controversial move the new Government has made since coming to office. In July Ms Reeves announced that winter fuel payments – which are worth up to £300 – will be means tested from this year.

This wil mean that around 10 million pensioners miss out in order to save the Treasury an estimated £1.4billion in the next financial year. Ms Reeves and Mr Starmer have said it is a “tough choice” they didn’t want to make – but there are no U-turns on cards.

Could there be any surprises?

Whitehall insiders have pushed back against any suggestion there could be showy surprises on Wednesday. A lot of the measures included in the Budget have been briefed already – much to the anger of Commons Speaker Sir Lindsay Hoyle.

And Mr Starmer has spoken in the past about his loathing of theatrics. When the Labour manifesto was unveiled in June ahead of the General Election, he responded to a question about the lack of surprises by saying: ““I’m running as the candidate to be prime minister not to run the circus.”

And he said at the time: “It’s not about rabbits out of a hat, not about pantomime.” If he’s carried that same mentality into Government, it’s safe to assume there won’t be any shock announcements.

But never rule anything out.