What to Expect in 2025 from the 2024 Autumn Budget

The UK government’s 2024 Autumn Budget has introduced a series of financial changes that will take effect in 2025, many of which directly impact elderly individuals. From pensions to benefit increases and National Insurance cuts, here’s a breakdown of what to expect in 2025 and how these changes could affect your financial planning.

1. State Pension and the Triple Lock in 2025

The government remains committed to the triple lock, which guarantees that the State Pension will increase annually by the highest of three factors: inflation, wage growth, or 2.5%. For 2025, it is projected that the State Pension will rise by 7%, helping pensioners keep up with the cost of living.

This is great news for those relying on the State Pension as a primary source of income. With inflation expected to stabilize, this increase will provide much-needed financial relief to pensioners facing rising prices on essentials.

2. Benefit Rate Increases in 2025

In line with the inflation figures, pensioner benefits such as Pension Credit, Attendance Allowance, and Housing Benefit are set to increase by 6% in April 2025. This boost will help protect the purchasing power of those relying on these benefits to cover everyday expenses.

3. National Living Wage Increase

For elderly individuals who are still working, the National Living Wage is set to increase significantly. From April 2025, the hourly rate is projected to rise to £12.00 for those aged 23 and over, with corresponding increases for younger age groups. This could provide additional financial security for older workers who continue to supplement their income through employment.

4. National Insurance Contributions

The Autumn Budget announced further reductions to National Insurance rates. For workers under the State Pension age, the contribution rate will decrease to 9% in 2025, down from 10%. This change may result in more take-home pay for elderly workers still in employment, allowing them to better manage living expenses and prepare for retirement.

For self-employed individuals, National Insurance rates will also be reduced, helping those who continue to run their own businesses later in life. More details on the specific changes to self-employment contributions will be released closer to 2025.

5. Local Housing Allowance (LHA)

Local Housing Allowance rates, which help cover rent for those claiming housing benefit or Universal Credit, will increase temporarily in 2025 to cover 30% of local market rents. However, this is set to last for just one year before rates are frozen again in 2026. If you rely on LHA to cover private rent, this increase may offer short-term relief as housing costs continue to rise.

6. Energy and Cost-of-Living Support

The government may announce further updates to energy price support schemes in 2025. While the Winter Fuel Payment and Cold Weather Payment schemes remain available, rising energy prices could trigger additional support for vulnerable households, including pensioners.

Keep an eye out for announcements regarding energy cost relief, especially as the colder months approach.

Conclusion

The 2024 Autumn Budget sets the stage for several changes in 2025 that will directly impact the elderly. From a projected 7% increase in the State Pension to benefit rate hikes and National Insurance reductions, these adjustments aim to ease the financial burden on pensioners and older workers. Staying informed about these changes can help you plan for the year ahead and make the most of your income and benefits.

At Later Living Helpline, we’re here to provide advice and support. If you have any questions about how these changes might affect you, don’t hesitate to get in touch with us!