The Budget: what to expect from 2024 UK Labour budget, predictions and news - from tax hikes to spending cuts

• Chancellor Rachel Reeves will unveil her first Budget, facing a £40 billion funding gap
• Tax hikes and spending cuts are expected, aimed at stabilising public finances
• VAT exemptions for private schools likely to end, funding 6,500 new state school teachers
• Key spending areas include education, housing and NHS investments
• Employer national insurance contributions are expected to rise, while the income tax threshold freeze will be extended

With Chancellor Rachel Reeves set to unveil her first Budget on Wednesday (30 October), all eyes are on what tax hikes and spending shifts might be in store for the general public.

Facing a reported £40 billion funding gap - nearly double the previous estimate of £22 billion - the Government has tough decisions to make to stabilise public finances and protect essential services.

For individuals and businesses alike, the Budget could bring significant changes, from potential tax increases to adjustments in public spending.

Here, we outline key areas to watch for in tomorrow’s announcement, from income and corporate tax adjustments to shifts in healthcare, education and welfare funding.

Whether you're a taxpayer, business owner, or someone who relies on public services, here’s what to look out for tomorrow.

Education

In education, the Government intends to remove VAT exemptions and business rate reliefs for private schools from January 2025, redirecting these funds to support the hiring of 6,500 new teachers in state schools.

Of course, this has been met with consternation from private school leaders, with the French and German ambassadors to the UK even requesting that international schools be exempt from these changes.

Elsewhere, expected Budget announcements also include £1.4 billion for the repair of deteriorating school buildings, tripling funding for free breakfast clubs, £1.8 billion for expanding government-funded childcare, and £44 million to support kinship and foster carers.

Housing

In social housing, right-to-buy discounts for tenants of council-owned homes will be reduced, and an additional £500 million will go towards affordable housing.

A consultation on a five-year social housing rent cap aligned with Consumer Prices Index inflation plus 1% will also be launched.

Funding of £128 million is earmarked for three major house building projects, with £56 million set aside to build 2,000 homes at Liverpool Central Docks, £25 million for a fund with Muse Places Limited and Pension Insurance Corporation to create 3,000 energy-efficient homes, and £47 million for pollution management to unlock new housing projects.

Jobs and employment taxes

Labour is expected to uphold its commitment to avoid increases in major taxes affecting “working people”: national insurance, income tax, and VAT.

Employer contributions to National Insurance are anticipated to rise by at least one percentage point, and the income tax threshold freeze is likely to be extended, bringing more taxpayers into higher tax brackets due to “fiscal drag.”

A £240 million investment is also expected to be announced to support local services aimed at helping people re-enter the workforce, part of efforts to reduce welfare costs.

Travel and trade

One of the headline grabbing expected announcements is that the £2 cap on bus fares will be replaced with a £3 limit through the end of 2025. Since January 2023, most single bus fares in England have been capped at £2 (£1.75 in London).

Fuel duty may also be raised for the first time in over a decade, ending a freeze in place since 2010.

In trade and infrastructure, contrary to previous announcements, no new freeports will be introduced. Instead, the Budget will allocate funding for the “next steps” at five new customs sites within three existing freeports.

Health

Significant investments are expected for the NHS, including £1.5 billion for new surgical hubs and scanners, £70 million for radiotherapy machines, and £1.8 billion for elective surgeries since July.

The Chancellor may also increase taxes on e-cigarettes, currently subject to VAT but not excise duty, to deter non-smokers from vaping.

As the new Budget unfolds, these changes could impact everyone - from taxpayers and homeowners to business owners and commuters. Join the conversation! Share your thoughts, questions, or concerns in the comments section.