Last updated on: 21 Oct 2024
What do we know so far?
The Government has already confirmed that the following will be included in the Autumn Statement, namely:
The abolition of the furnished holiday lettings tax regime;
Pillar Two: transitional country-by-country reporting safe harbour anti-arbitrage rule;
VAT on private school fees and the removal of charitable rates relief for private schools;
Tax treatment of carried interest;
Changes to the taxation of non-UK domiciled individuals;
Energy profits levy reform; and
Closing the tax gap.
What are our predictions?
The Government has promised that it will not raise taxes on "working people," defined as 'people who earn their living, rely on our services, and don’t have the ability to simply write a cheque when they get into trouble.'
The Government has also indicated that it will not reverse the freezing of income tax bands, which is scheduled to continue until 2028. Consequently, the resulting "fiscal drag" will continue to bring more people into the higher rate tax band. We expect the Government may extend the freeze period, given the ‘black hole’ in public finances.
The Government has also promised not to increase income tax, national insurance contributions (including reversing recent cuts made by the previous Government), or VAT, making inheritance tax and capital gains tax primary targets for potential tax hikes.
Inheritance tax
Possible changes include:
Increasing the rate of tax;
Removing the exemption for residuary pension funds;
Introducing a cap on business property relief;
Tightening the criteria for what qualifies as business property and agricultural property;
Removing capital gains tax (CGT) rebasing where some form of inheritance tax (IHT) relief (e.g. gifts to spouses, business, and agricultural assets) is applied; and
Extending the potentially exempt transfer qualifying period from 7 years to, say, 10 years.
One simplification measure that may be implemented in the budget is the abolition of the residential nil-rate band, with a corresponding increase to the main nil-rate band.
There are also discussions about introducing a wealth tax. However, designing a robust new system is challenging, and the experiences of other countries have not been encouraging.
Capital gains tax
The Government could consider:
Increasing the rate to align with income tax;
Making a compensatory increase in business assets disposal relief; and
Reviewing principal private residence relief — potentially removing it altogether or converting it into some form of rollover relief.
Businesses
The Government is likely to:
Publish a roadmap for business taxation. This roadmap will confirm the pre-election Government promise to cap corporation tax at the current 25% rate for the next five years.
Introduce the full expensing system for capital investment and maintain the annual investment allowance for small businesses.
Address the current business rates system, which the Government manifesto stated “disincentivises investment, creates uncertainty, and places an undue burden on our high streets.”
There are discussions about increasing national insurance contributions for employers and introducing national insurance contributions on pension contributions by employers. However, the probability of these measures being introduced is low, as they would significantly increase costs for businesses and disproportionately affect small businesses.
Additional considerations
We do not expect the reintroduction of the lifetime allowance, but the Government could introduce a single rate of relief for pension contributions.
The Government may use the Autumn Statement to encourage the shift to low-emission or zero CO2 vehicles by:
Reintroducing the fuel duty escalator; and
Significantly increasing the benefit-in-kind tax for other company cars.
To prevent stamp duty land tax (SDLT) from acting as a disincentive to moving house, perhaps SDLT could be introduced as an annual charge rather than a transaction-based one.
We believe now might be an opportune time for the Government to conduct a council tax revaluation—the last one was in 1991—or to introduce something more radical for council tax.
To share your thoughts or discuss how the Autumn Budget 2024 will impact you, individually or as a business:
Visit us at: www.xcelaccountancy.com
Email us at: hello@xcelaccountancy.com
Speak to us on: 0330 111 7888
**Disclaimer:** This article expresses the views of the author and does not constitute advice. Please use your own discretion and/or seek professional help before acting on any of the points covered above.
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