With only hours to go, what are we expecting from the Autumn Budget 2024?
To balance the public books we expect the Chancellor to tell us that the government needs tax rises and spending cuts to the value of £40bn.
The Prime Minister and the Chancellor have both been repeating the “difficult financial decisions” message. But Rachel Reeves has been stressing that there will be no return to austerity, suggesting that most of the £40bn gap is to be funded from tax rises, not spending cuts.
Ms Reeves has also said that she will not be borrowing more to fill the gap, suggesting that day to day spending must be funded from tax rises. She is however planning to alter the definition of government debt to allow her to borrow more to fund investment projects.
So which taxes are we expecting to rise?
- Employers National Insurance (NI) Contributions – currently 13.8% paid on workers earnings. The rate could rise, or it could be extended to apply to pension contributions made by employers.
- Income Tax and NI thresholds – currently frozen until 2028. The freeze could be extended until 2029.
- Inheritance Tax – currently usually 40% of the value of the deceased’s assets above the £325,000 threshold. Just 4% of deaths result in an inheritance tax charge. Changes could include altering the rules around gifts given during life, Business Relief and Agricultural Relief.
- Capital Gains Tax – currently charged on the profit made from the sale of assets that have increased in value, such as investments or second homes. Paid by individuals and some business owners at 24% on property gains and 20% on other assets. An increase in rates could be on the cards.
- Pension Taxes – speculation that the tax-free lump sum cap taken from pension pots could be reduced, the tax relief on employers pension contributions cut, or system change for tax relief on pension contributions [currently 20% at basic rate, and 40% and 45% for higher rate taxpayers].
- Stamp Duty – temporary increases to current thresholds are due to expire in March 2025, returning them to £125,000 and £300,000 for first time buyers.
- Non-Dom status – it was muted that non-dom status would be abolished. Non-doms only pay tax on the money they earn in the UK. The government seems to be reconsidering this plan.
We already know:
- Winter fuel payments will only be made to those getting pension credits or other means-tested help
- State pension – rises by 4% in April 2025
- VAT on private school fees – charged from 1 January 2025
- Energy windfall tax – energy profits levy due to rise to 38% from 35% on 1 November and remain in place until 31 March 2030
- Single bus fare cap rising to £3.00 in England
As always, you are reminded that this article is generic in nature and you should take no action based upon it without consulting your professional advisor.
Related Blogs
Autumn Budget: Employers National Insurance | Bates Weston
Inheritance Tax, Business Property Relief and the Autumn Budget | Bates Weston
Autumn Budget: Pension Tax Relief | Bates Weston