What does the Budget mean for your money?

A Budget packed with announcements ranging from tax and spending to pay and pensions has been revealed by Chancellor Rachel Reeves.

Much of what she said could affect you and your finances directly, so here’s what it means for you.

Minimum wages, paid by employers, will rise across the UK in April. It means:

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

The separate apprentice rate which applies to eligible people under 19 – or those over 19 in the first year of an apprenticeship – will also increase from £6.40 an hour, to £7.55.

The increases are smaller, in percentage terms, than the previous two years. However, prices are rising at a slower rate now.

On top of the extra cost of paying staff on the minimum wage, many employers will have to make a bigger contribution to National Insurance (NI) covering more of the people they employ.

NI paid by employees will not change.

But businesses say the chances of you getting a job or a pay rise may be hit as a result of the extra financial burden employers face.

Some could raise prices to cover the cost.

The single bus fare cap applied to many routes in England will be raised to £3 in 2025, up from £2.

Single bus fares in London with Transport for London will remain at £1.75 and those in Greater Manchester at £2, owing to a different funding system in those cities.

Fuel duty has been frozen since 2011, and that will continue. A 5p-a-litre fuel duty cut has also been extended.

Inheritance tax (IHT), which is currently 40%, is usually paid on the value of a deceased person’s assets above a threshold of £325,000. That threshold has been prolonged to 2030.

At present, any money saved in a pension does not count towards this but, from April 2027, inherited pensions will be included.

This is likely to bring more estates into the inheritance tax net, owing to pension savings that have not been spent before somebody dies. The government says this could affect 8% of estates.

Until now, various exemptions have allowed certain types of property, such as farms and family business assets, to be disregarded in terms of inheritance. However, from April 2026, the rules will ensure some tax will be paid on assets of more than £1m.

Capital gains tax (CGT) is charged on the profit made from the sale of assets that have increased in value, such as second homes or investments.

The chancellor has announced the rate at which CGT is charged will go up, from 10% to 18% for basic rate taxpayers, and 20% to 24% for those who pay at the higher rate. This will match the existing rates for property which will stay the same.

Tax on tobacco will increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco.

A flat rate of duty will be applied on all vaping liquid from October 2026, at £2.20 per 10ml vaping liquid.

Tax on non-draught alcoholic drinks will increase by the higher RPI measure of inflation, but tax on draught drinks will be cut by 1.7%.

Stamp duty on the purchases of second homes, buy-to-let residential properties, and companies purchasing residential property in England and Northern Ireland, will rise from 3% to 5% on Thursday.

Analysts say this could affect landlords’ willingness to buy more properties. If the supply of rental properties is squeezed, that could mean rents rise for tenants in the remaining homes.

A much-discussed Labour policy has been formally announced, which means that VAT at the standard rate of 20% will be added to private school fees from 1 January, 2025.

How much extra that means parents of privately-educated children will have to pay depends on the decision of individual schools. It is also highly unlikely they will now be able to avoid the extra fees by paying in advance.

The chancellor confirmed the amount received in benefits will rise by 1.7% in April, in line with inflation.

The most common benefit, claimed by seven million people (38% of whom are working), is universal credit. The rise would mean the standard allowance, for a single person aged under 25, is expected go up by £5.30 a month to about £317. For a couple aged over 25, the rise is likely to be £10.50 to £628 a month.

The total amount received in universal credit depends significantly on your circumstances.

The chancellor said there would be a widespread review of health and disability benefits.

Carers will be able to earn more before losing their allowance. The maximum earnings threshold will rise from £151 to £195 a week.

The state pension will rise in line with average earnings, going up by 4.1% in April. It means

• The full, new flat-rate state pension (for those who reached state pension age after April 2016) is expected to increase to £230.30 a week. That will take it to £11,975 a year, a rise of £473 compared with now
• The full, old basic state pension (for those who reached state pension age before April 2016) is expected to go up to £176.45 a week. That will take it to £9,175 a year, a rise of £361 compared with now.

But the chancellor has previously announced that millions of pensioners will lose their winter fuel payment, worth up to £300, as a result of a government cut.

A freeze in the income thresholds at which different rates of income tax are paid continues as planned.

There had been speculation this would be prolonged, but the chancellor ruled this out, saying thresholds will rise in line with prices from 2028.

Until then, any kind of pay rise could drag you into a higher tax bracket, or see a greater proportion of your income taxed than would otherwise be expected.

Scotland has its own income tax rates.

You may not earn enough to pay income tax, so VAT, paid when buying goods and services, may hit you harder and that’s been left unchanged.

Anyone who dodges paying tax faces a higher interest rate when paying it back.