The forthcoming Autumn Budget, scheduled for 30th October 2024, looks likely to bring significant changes that could affect many people. While the full details are clearly not yet known, and we do not have a crystal ball to predict the future, several predictions and announcements potentially give us a glimpse of what’s to come.
For the average household:
- Income and everyday taxes: There’s some good news as Labour made a manifesto commitment, and reaffirmed this in the past few weeks, to not raise income tax, National Insurance, VAT, or corporation tax. This means most people’s take-home pay should remain stable.
- Pension changes: Earners who pay higher or additional rate income tax might see a reduction in pension tax relief, potentially moving to a flat rate system. Additionally, the 25% tax-free lump sum from pension pots might be reduced over time, affecting retirement planning for many.
- Property and investments: Capital Gains Tax (CGT) rates may be aligned with income tax rates, or at least increased from current rates, potentially increasing tax on property sales or investment gains. This could impact those looking to sell second homes or significant investments, including people selling their businesses.
- Inheritance plans: While a wealth tax has seemingly been ruled out, potential changes to Inheritance Tax (IHT) exemptions for agricultural land and businesses might affect those planning to pass on such assets.
- Education costs: We already know that from January 2025, VAT will be applied to private school fees, making private education more expensive for those who opt for it.
- Council tax and business rates: These could potentially rise, affecting homeowners and local businesses alike.
For specific groups:
- Non-domiciled individuals: Significant changes to taxation are coming from April 2025, which will affect international workers and investors in the UK.
- Business owners: While corporation tax rates are set to remain stable until 2029, potential changes to Business Asset Disposal Relief (formally known as ‘Entrepreneurs Relief’) could impact those looking to sell their businesses.
- Private equity investors: These may face higher tax rates on their earnings, moving from capital gains tax treatment to income tax treatment on their earnings.
- Holiday let owners: New rules are coming for furnished holiday lets, which will affect those who rent out holiday properties.
While these changes aim to address the government’s financial challenges, they will undoubtedly have wide-reaching effects. It’s important to note that many of these are still predictions and speculation, and the full impact will only be clear after the Budget announcement. As always, it’s advisable to consult with financial advisors to understand how these changes might affect your personal situation.
Author – Ben Powell, Ballards LLP