Autumn Budget 2024 - What to Expect

The Autumn Budget 2024 - the first from the new Labour government - will take place on
Wednesday 30 October. Chancellor Rachel Reeves is expected to deliver a Budget with
significant tax changes and many measures to raise revenues for the Government. Changes to
Inheritance Tax, Capital Gains Tax and VAT exemptions are anticipated, along with further detail
on tightening of the non-doms scheme and the taxation of private equity carried interest.
 

Here’s a breakdown of what to expect and how to prepare:

Increased Taxation on High Earners and Wealth

• Labour is likely to introduce higher taxes on wealth, including potential new levies on high-
  net-worth individuals. This may include increased income tax rates for higher earners and
  a new "wealth tax" targeting those with substantial assets.
• New income tax rate for passive income, such as rental or interest income.
• Expect measures aimed at wealth redistribution, with funds likely directed toward public
  services and social programs.
   

Inheritance Tax (IHT) Reforms have been Long Anticipated

• Inheritance tax will be a significant focus, with Labour likely to propose lowering the
  current IHT threshold, which is currently £325,000, and potentially reducing exemptions or
  reliefs, such as business relief.
• A restructuring of IHT rates is possible, with higher rates for larger estates, aiming to ensure
  that wealth is more evenly distributed upon death.
• Changes to rules around lifetime gifts and trusts might also be introduced, closing
  loopholes that allow passing on assets with reduced tax liability.

• Labour could align CGT rates with income tax rates, particularly for higher and additional
  rate taxpayers, leading to a significant increase in the tax on gains from investments,
  property and other assets.
• A reduction in the annual CGT exemption is expected, bringing more taxpayers into the fold and increasing the overall tax burden on capital gains.

• Businesses should prepare for a potential increase in corporation tax, especially for large
  corporations. Labour is expected to raise rates to ensure that profitable companies
  contribute more to public finances.
• Tax incentives for businesses investing in green technologies and sustainability initiatives
  are likely to be expanded, aligning with Labour's climate agenda.

What Should Businesses and Individuals Do Now?

With these potential changes on the horizon, it’s crucial for businesses and individuals to take
proactive steps to prepare.

Wealth and Estate Planning

• Individuals should reassess their estate planning strategies in light of potential IHT
  changes.
• Consider making use of current exemptions, such as the £325,000 threshold and the
  residence nil-rate band, before any reductions are implemented.
• Explore gifting strategies, trusts, and other tax-efficient vehicles to pass on wealth while
  minimising IHT liability.
• With Labour possibly tightening rules around lifetime gifts, acting sooner rather than later may be advantageous.

• With potential increases in CGT rates, individuals should consider the timing of asset
  sales. Locking in gains before new rates take effect could result in significant tax savings.
• Diversifying portfolios and investing in tax-efficient vehicles, such as ISAs, could help
  mitigate the impact of higher CGT rates and reduced exemptions.