“No return to austerity – that is the choice I have made today” – Rachel Reeves HM Chancellor of the Exchequer.
Seldom has the run up to a Chancellor’s Budget created so much investor interest, or press speculation than that ahead of Rachel Reeves’ visit to the dispatch box on Wednesday 30 October.
Ever since the announcement of a ‘£22 billion black hole’, rumours have been rife about Budget Day. As with all these things, the devil is in the detail, and there are to be certain consultations before all is clear and written into law. Partners Wealth Management will provide future updates on such matters.
Please click here for a full summary of the Autumn Budget, sets out more information behind the main announcements.
Some of the headlines:
- Capital Gains Tax (CGT) – from 30 October 2024, rates increase to 18% for lower rate taxpayers and 24% for higher rate taxpayers. This brings these rates in line with CGT on residential property for which there is no change at 18% and 24% for lower and higher rate taxpayers.
- Inheritance Tax (Pensions and IHT Thresholds) – from April 2027, Pensions will become subject to Inheritance Tax (IHT). How this will happen is not yet clear, with consultations occurring beforehand. We will be monitoring this closely to ensure that once the legislation is defined, we can advise on what future action best suits your objectives in relation to passing wealth on to the next generation. In addition, the freeze on IHT thresholds has been extended from April 2028 to April 2030, meaning that it will have been frozen for 21 years (since 2009).
- IHT (Agricultural Property Relief and Business Relief) – from April 2026 individuals who hold assets that qualify for these reliefs will only have this relief applied to the first £1M of combined APR and BR assets with an IHT charge of 20% on the balance (50% charge of the normal 40% IHT tax rate).
- IHT (AIM) – from April 2026, AIM portfolios suffer a reduction in relief of 50% at all portfolio levels (so again, a 20% charge based on a 40% IHT rate).
- Employers’ National Insurance – from April 2025, this is set to increase by 1.2% from 13.8% to 15% with the threshold on which this is payable reduced from £9,100 to £5,000 (and an increase to the Minimum Wage). Perhaps an opportunity for businesses to consider tax and NI efficient salary sacrifice arrangements and pension contributions.
- Stamp Duty Land Tax (SDLT) – from 31 October 2024, the additional SDLT rate for second homes and buy-to-let properties increases from 3% to 5%. The temporary increase in the 0% SDLT band for first time and other property buyers will end on 31 March 2025.
- ‘Non-Domicile’ Tax Regime – this is to be abolished and replaced with a more modern residence-based tax system from April 2025. This will result in many changes for both new arrivals and long-term residents.
- Valued Added Tax (VAT) – as previously announced, will be applied to private school and boarding fees from January 2025.
- Income Tax Thresholds – will remain frozen until 2028.
We will continue to look for opportunities to optimise your financial planning. If you would like to discuss any of the points raised, or your wider financial position, please call 020 7444 4030 or email us.
The information and/or any reference to specific instruments contained in this article does not constitute an investment recommendation or tax advice. The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information. This document reflects our understanding of current legislation. Past performance is no guide to future returns.