How will the Autumn 2024 Budget Affect you?

So, on October 30, 2024, Chancellor Rachel Reeves is set to present the first Budget of the new parliament.

There’s a lot of buzz about what might be in store, and here's a rundown of what we already know.

What’s on Labour’s Tax Agenda?

In their pre-election manifesto, Labour laid out some big tax plans, including:

• Closing non-dom tax loopholes: They want to tackle those loopholes that let some wealthy individuals pay less tax.
• Investing in tax compliance: More compliance officers and updated processes are on the table to cut down on tax avoidance.
• VAT and business rates on private schools: They’re looking to apply VAT and business rates to private schools.
• Ending the carried interest tax loophole: This would ensure that certain investment gains are taxed like regular income.
• Higher Stamp Duty for non-UK residents: A 1% increase is being considered for residential property purchases by non-UK residents.
• Windfall tax on oil and gas companies: They’re eyeing a tax on these big players to share the wealth.

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What’s Already Been Announced?

Some changes have already been put on the table by the new government:

• Non-domicile taxation reform: The non-dom tax regime will be abolished starting April 6, 2025. They’re adopting some of the previous government's proposed rules but will tighten up other loopholes.
• Abolition of Furnished Holiday Letting (FHL) rules: From April 2025, businesses using FHL will lose some tax benefits under Income Tax, Capital Gains Tax, and Corporation Tax.
• VAT on private school fees: Starting January 1, 2025, private schools will charge VAT on their fees. Plus, they might lose their business rates relief from April 2025.
• Corporation Tax plans: Rachel Reeves recently confirmed they’ll outline a business tax roadmap at the Budget. They plan to cap Corporation Tax at 25% and keep full expensing for businesses.
• Making Tax Digital: There’s a new 'Digital Transformation Roadmap' in the works, and HMRC is looking to get feedback on electronic invoicing.

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What Might Be Coming Down the Line?

There’s a lot of speculation about what might pop up in the upcoming Budget. Here are some common predictions:

• Income Tax and pensions: They could set a flat rate limit on tax relief for pension contributions, maybe around 30%.
• Capital Gains Tax (CGT): There’s talk of bumping CGT rates to match Income Tax rates or even introducing a fixed rate. Changes around private residence relief might also be on the table.
• Motoring taxes: Expect possible increases in fuel duty and adjustments for company car taxes, along with a ‘pay per mile’ road tax.
• Other taxes: We might see hikes on alcohol and tobacco taxes, plus tweaks to Inheritance Tax, like capping reliefs and making sure certain pension pots aren’t exempt from tax on death.

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What Probably Won’t Change?

Some things look less likely to get a makeover. For instance, they’ve dropped plans to reintroduce the pensions Lifetime Allowance charge during the election. Plus, the new government has pledged not to increase Income Tax, National Insurance, or VAT.

So, keep an eye out for October 30th! It’s bound to be a big day for the economy with plenty of market movement.

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