Pre-Budget 2024 Predictions
Posted on 23rd October 2024
Rachel Reeves will deliver her Autumn Budget on 30 October 2024. This will be Labour’s first Budget since winning an overall majority of seats in the UK General Election on 4 July 2024.
Prime Minister, Keir Starmer, has warned the public that this will be “painful” as they introduce measures to try to fill the “black hole”.
As we have become used to over the past few years, although the Budget will be formally announced on 30 October, there will be a slow trickle of rumours and announcements over the week or so leading up to it.
Nothing at this point is confirmed - but speculation in the media suggests the following potential changes.
An extension to the freeze on tax thresholds (“fiscal drag”)
Rishi Sunak previously announced that these would be frozen until 2028, but this is now expected to be extended further. This then causes fiscal drag (new buzz word!) by pulling more people into tax at 20%, 20% and 45% as inflation increases wages.
This means that those on the national minimum wage and even pensioners will be paying higher amounts of tax.
An increase in Employers’ NI
Currently Employers pay 13.8% National Insurance. Even a 1% increase could bring in £8-9bn for the Treasury, so it is easy to see why this may be in Rachel Reeves’ sights.
Rather than increase the rate, it has also been suggested that they may impose NICs on employer pension contributions.
An increase in Capital Gains Tax (CGT) rates
CGT is paid on gains made on the disposal of assets (land, property, shares etc).
Current rates are 10% and 20% (not including residential property) and 18% and 24% for residential property.
There is speculation of Labour bringing CGT rates in line with Income Tax Rates i.e. 20% and 40%, or in them bringing one flat rate of CGT.
A reduction or abolition of Business Asset Disposal Relief (BADR)
Previously known as Entrepreneurs’ Relief, this relief means that in most cases, where a business is sold or shares in a close company are sold, there is a reduced rate of 10% CGT payable.
There is a lifetime limit of £1m.
Speculation suggests Rachel Reeves may target this relief - either through removing it altogether or reducing the lifetime limit.
To sum up!
Other possible changes have been mentioned in relation to pension contributions, IHT and fuel duty.
We will be watching and listening intently next week and will take a few days to process the announcements. As always the devil is in the detail and this takes a few days for full publication.
We will then publish our blog with our Budget round-up and contact our clients for more in-depth discussions as needed.
Written by:
Nicola J Sorrell - Effective Accounting
Founder | Xero Champion | IR35 Expert
Tagged as: Budget & Tax Rates
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