UK Budget 2024: what you need to know about the major economic changes
Chancellor Rachel Reeves has unveiled significant reforms to taxation and public spending in the 2024 Budget. Here's how the changes could affect markets and your finances.
Major tax reforms and revenue raising measures
The first Labour party Chancellor in 14-years, Rachel Reeves, has announced substantial changes to employer National Insurance, with contributions increasing by 1.2 percentage points to 15% from April 2025. This represents one of the most significant shifts in business taxation in recent years.
The abolition of non-domicile tax status marks another key reform, to be replaced with a residence-based system. This change could impact trading patterns as wealthy individuals adjust their UK investment strategies.
Capital Gains Tax (CGT) rates will see notable increases, rising from 10% to 18% for the lower rate and 20% to 24% for the higher rate. These changes could influence how investors approach their share trading.
The Energy Profits Levy on oil and gas companies will increase to 38% and extend until 2030, potentially affecting commodity trading strategies in the energy sector.
Public investment and economic growth forecasts
The government has committed to over £100 billion in additional capital spending over five years, marking the largest public investment programme since 2008. This could create new opportunities for share investing.
Economic growth is forecast at 1.1% in 2024, rising to 2.0% in 2025. These projections could influence trading decisions across various markets.
The National Health Service (NHS) will receive an extra £22.6 billion by 2025-26, potentially benefiting healthcare-related stocks. This represents the highest real-terms increase since 2010 outside of Covid-19 years.
The education budget increase of £2.3 billion could create opportunities for companies in the education sector, worth considering for long-term investing.
Cost of living measures and their market impact
The National Living Wage increase to £12.21 per hour could affect retail and hospitality sector shares, as companies adjust to higher wage costs.
The maintenance of the State Pension Triple Lock, with a 4.1% rise in 2025-26, could influence investment strategies in companies serving the retirement market.
The fuel duty freeze extension could benefit transport and logistics companies, creating potential opportunities for online trading.
Working age benefits will increase by 1.7%, which could impact consumer spending patterns and retail sector performance.
Business support and sector-specific changes
The confirmation of the corporation tax cap at 25% provides certainty for businesses and could positively influence market sentiment.
Retail, hospitality, and leisure businesses will benefit from permanent lower business rates multipliers from 2026-27, potentially creating investment opportunities.
The penny cut in duty on draught products could benefit pub chains and brewing companies listed on the UK stock market.
These sector-specific measures could create varied trading opportunities across different market segments.
How to trade the UK Budget changes
- Research how the Budget changes might affect different sectors and markets
- Consider whether you want to trade or invest based on the changes
- Open an account with us to access thousands of markets
- Analyse potential opportunities using our comprehensive trading platform
- Place your trades while managing risk appropriately
Remember that markets can be volatile following major economic announcements, so it's essential to have a clear strategy and risk management plan in place.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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