There is unlikely to be much to celebrate when Rachel Reeves delivers her first Budget on the 30th of October.
Speculation is rife regarding the likely targets for tax increases. We have listed a few of the more persistent predictions below. But note, these are just predictions and there will no doubt be “surprises” when the Budget details are released.
Personal Taxes and Pensions
Labour has pledged not to increase the main rates of Income Tax, National Insurance (NI), or VAT, but other forms of personal taxation may be impacted. Pensions, in particular, are expected to be a focus. For example:
Capital Gains Tax (CGT) and Inheritance Tax (IHT)
CGT rates could be increased, with some speculation suggesting they may be aligned with Income Tax rates, raising the top rate from 20% to as much as 45%. This would significantly impact higher earners and business owners. Another option is introducing a "double death tax," where assets are taxed both via CGT upon death and subsequently through IHT.
Regarding IHT, Labour might increase the tax rate above the current 40% or reduce the £325,000 nil-rate band. Pension pots, currently excluded from IHT, could also be brought into the fold. .
Business Taxes
While Labour has ruled out large hikes in business taxes, some changes are expected. For example:
Other Measures
Overall, the October 2024 Budget is shaping up to include "painful" decisions as Labour looks to tackle the fiscal deficit, with changes focused on wealth and asset taxes, pensions, and potentially significant tweaks to business taxation policies.
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