2025 reforms¶
Autumn Budget 2024¶
The government increased the employer National Insurance rate from 13.8% to 15% and reduced the employer secondary threshold from £9,100 to £5,000 annually, both taking effect in fiscal year 2025-26.
Universal Credit rebalancing¶
Parliament passed legislation to implement Universal Credit rebalancing reforms, with the rebalancing switch activated in fiscal year 2025-26. The reforms include graduated standard allowance uplifts above inflation: 2.3% in 2026-27, 3.1% in 2027-28, 4.0% in 2028-29, and 4.8% in 2029-30. A new health element of £217.26 will be introduced for new claimants in fiscal year 2026-27.
Benefit uprating¶
Annual benefit uprating applied 4.1% increases to state pensions and 1.7% to working-age benefits, implemented through the standard uprating mechanism.
2024 reforms¶
Autumn Statement 2023¶
The government announced further National Insurance cuts, reducing the employee main rate from 10% to 8% and the self-employed Class 4 rate from 9% to 6% in fiscal year 2024-25. Class 2 National Insurance contributions were abolished for self-employed people, with the flat rate set to £0 in fiscal year 2024-25.
Capital gains tax changes (Autumn Budget 2024)¶
The government increased capital gains tax rates from 10%/20% to 18% for basic rate taxpayers and 24% for higher rate taxpayers in fiscal year 2025-26.
Spring Budget 2024¶
The government increased the child benefit high income tax charge threshold from £50,000 to £60,000 in fiscal year 2024-25.
Autumn Statement 2023 (Employee NI cut)¶
An initial National Insurance cut reduced the employee main rate from 12% to 10% in fiscal year 2024-25.
2023 reforms¶
Autumn Statement 2022¶
The government reduced the additional rate income tax threshold from £150,000 to £125,140, taking effect in fiscal year 2023-24. The government also began reducing the capital gains tax annual exempt amount from £12,300 to £6,000 in fiscal year 2023-24, with a further reduction to £3,000 in fiscal year 2024-25.
2022 reforms¶
Spring Statement 2022¶
The government announced an increase in the National Insurance primary threshold from £9,880 to £12,570, aligning it with the personal allowance in fiscal year 2022-23.
Autumn Budget 2021 (Health and Social Care Levy)¶
The government temporarily increased National Insurance rates by 1.25 percentage points in fiscal year 2022-23, later reversed the same fiscal year.
Mini-Budget 2022 (September)¶
The government announced increases to stamp duty nil rate thresholds, raising the main threshold from £125,000 to £250,000 and the first-time buyer threshold to £425,000.
Cost of living support¶
The government announced cost of living payments: £650 for means-tested benefit recipients, £300 for pensioners, and £150 for disability benefit recipients, implemented through dedicated payment calculation variables.
Energy Price Guarantee¶
Following the energy crisis, the government introduced an Energy Price Guarantee capping typical household bills at £2,500 in fiscal year 2022-23.
2021 reforms¶
Autumn Budget 2021¶
The government reduced the Universal Credit taper rate from 63% to 55% and increased work allowances by £500 annually in fiscal year 2021-22.
End of COVID-19 support¶
The government ended the Universal Credit £20 weekly uplift in fiscal year 2021-22, with rates reducing from the elevated 2020-21 levels.
Stamp duty holiday extension¶
The government extended the stamp duty holiday with phased withdrawal of the nil rate increases during fiscal year 2021-22.
2020 reforms¶
Summer Economic Update (July 2020)¶
The government introduced a stamp duty holiday with nil rates up to £500,000 in fiscal year 2020-21 to support the housing market.
COVID-19 response (March 2020)¶
Emergency measures included a £20 weekly increase to Universal Credit standard allowances and other working-age benefits in fiscal year 2020-21.
Current baseline (2025)¶
Key features:
- Income tax: 20%/40%/45% rates with personal allowance of £12,570 and higher rate threshold of £50,270
- National Insurance: 8% employee rate, 15% employer rate, 6% self-employed rate
- Capital gains tax: 18%/24% rates with £3,000 annual exempt amount
- Universal Credit: 55% taper rate with rebalancing reforms active
- Benefits: Standard uprating with targeted cost of living support for 2022
What is not modelled¶
Notable exclusions:
- PIP reform announced in Autumn Statement 2023: The government announced reforms to Personal Independence Payment assessments and eligibility criteria, phasing out 25% of claimants between 2025-29. These reforms are defined as a scenario but not included in the baseline model
- Non-domiciled taxation changes: Remittance basis abolition and four-year exemption regime from fiscal year 2025-26 are not modelled
- Non-UK resident stamp duty surcharge: 2% additional rate from fiscal year 2021-22 is not modelled
- Some devolved tax policies: Beyond property transaction taxes, other devolved policies may have limited coverage
All parameter values include references to primary legislation and can be found in the PolicyEngine UK parameters directory.