The Autumn Budget 2024: What it means for families
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The Autumn 2024 Budget: How it could affect you
Living Wage increase: The National Living Wage will rise in April 2025 from £11.44 to £12.21 per hour if you’re aged 21 or above, and from £8.60 to £10 if you’re aged 18 to 20. This is a 6.7% increase compared to 2024. This aims to alleviate cost-of-living pressures for low-income households facing inflationary challenges on essentials like energy and groceries. This increase is intended to support workers as they navigate high living costs.
Benefit increases and cost-of-living support: As mentioned above, working-age benefits will increase by 6.7% in line with inflation, and pensions will see an 8.5% rise. This aims to provide additional relief amid ongoing cost-of-living pressures.
Employment and welfare reforms: The budget outlined a £2.5 billion“Back to Work” initiative targeting long-term unemployed individuals and those with disabilities, with increased job centre support and expanded mental health assistance. There’s also a new “Chance to Work Guarantee” for high-tier health benefit recipients, allowing them to explore job opportunities without risking immediate loss of benefits if they cannot maintain employment due to health limitations. The government also emphasised sanctions for those able to work but who aren’t actively engaging with job-seeking efforts.
Universal Credit adjustments: The Budget has introduced caps on the amount that can be deducted from your Universal Credit allowance to repay debts like County Court Judgements, rent arrears, and council tax arrears. At the moment, up to 25% of your benefits can be taken off you to pay these types of debts, but from April 2025, this will be reduced to 15%. This is to help protect vulnerable families from sudden drops in income and provide them with more consistent financial support. This 10% difference means that the average Universal Credit claimant will have access to an extra £470 annually.
Benefits: Benefits paid by HMRC are going up by 1.7% from April 2025, with the exception of Tax Credits, as these are being phased out by April 5th, 2025, and being replaced by Universal Credit. They’re also trying to speed up the rate of people being migrated over to Universal Credit to simplify the system.
Child benefit: All expectations were that this would be changed to be based on household income rather than the highest earner’s income. Unfortunately, this isn’t the case, and the calculation will remain based on the highest earner’s income. The thresholds are also staying the same – you’ll start to lose Child Benefit once the highest earner brings home £60,000, and if they earn £80,000, you aren’t entitled to it at all.
Carers allowance: Set to take effect in April 2025, the earnings threshold for carer’s allowance will rise from £151 to £196 per week, aligning with 16 hours of work at the National Living Wage. This adjustment allows around 60,000 more carers to qualify for carer's allowance, helping those who previously had to reduce their work hours to avoid exceeding income limits. The change is expected to alleviate financial strain and prevent overpayment issues for many carers.
Extended parental leave provisions: By making flexible working the default, establishing a new right to bereavement leave, and making paternity and parental leave available from day one of starting a new job. There was no increase announced to the current rates of maternity pay. Those earning minimum wage may receive slightly more thanks to the newly announced increase to the National Living Wage if they take their maternity leave after April 2025.
Expansion of the Help to Save scheme: The government is broadening access to the Help to Save scheme, which encourages low-income earners to build financial security. This program provides a 50% government bonus on savings up to a certain amount, allowing households to accumulate emergency funds more easily.
Bus fare cap: The £2 cap on bus fares is increasing to £3. This means a single bus journey will cost up to £3. The cap won’t change again until December 2025. The only exception to this is the Bee Network of buses in Greater Manchester, which will be staying at £2.
How have you been affected?
The Autumn Budget 2024 aims to ease financial strain for low-income families with updates like raising the National Living Wage and increasing support through Universal Credit adjustments. However, some changes may have mixed impacts on households already dealing with high living costs. These changes could provide some relief but may not fully address the ongoing challenges of inflation and economic pressures.
Disclaimer: This blog provides general information only and should not be considered financial advice.