Yesterday saw a noteworthy Budget by the new Labour government. Noteworthy in that it was the first by a Labour government since 2010 and the first ever by a female Chancellor of the Exchequer. However it is also noteworthy in that it heralded the announcement of £40 billion of yet more tax rises.
Whilst it would be very difficult to begrudge the extra funding for the hard pressed and under funded NHS and education department, not everyone will be happy about the way funds are to be raised. In particular, they have ‘picked on’ land owners, business owners and pension pots to pay a lot more tax.
- The rise in employer’s National Insurance contributions is a tax on business. Although smaller businesses may feel less impact due to the employment allowance more than doubling, medium and larger businesses will undoubtedly feel the pinch. Could this ultimately filter through to employees, resulting in lower future pay rises or could we see a reduction in recruitment as available cash is squeezed.
- The changes to inheritance tax agricultural and business reliefs are very significant. Many farmers or land owners will have to plan carefully and may have to sell land and/or take out insurance cover in order to fund future inheritance tax bills. This could reduce further the number of viable farms in the UK and affect our food security – an issue that came to prominence during Covid times.
- The much anticipated increases to capital gains tax were announced but the increases were much less than many had anticipated. Of particular note is the future increases in the rates of CGT when business asset disposal relief applies. This will increase from 10% to 14% from 6 April 2025 and eventually to 18% from 6 April 2026. This could lead many business owners to consider accelerating a sale ahead of these increases.
- The increase in the Stamp Duty Land Tax surcharge to 5% on the purchase of a second home (in addition to ‘ordinary’ stamp duty) will deter many potential second home buyers and investors. This could lead to more second homes being placed on the market and potentially a reduction in property rental stock.
- The change announced that brings pension pots into the inheritance tax net is another fundamental change. Previously, it was advisable for those with sufficient funds elsewhere to avoid drawing from their pensions. Many will now have to reconsider their retirement plans.
Click here to view our summary of the 2024 Autumn Budget
Beavis Morgan is here to help guide you through the changes, so please do get in touch to discuss how these developments might affect you and your planning.
If you have any questions relating to the announcements, or require advice and guidance for you and your business, please contact your usual Beavis Morgan Partner or email info@beavismorgan.com.