What to Expect from the UK Autumn Budget 2024: Key Rumoured Changes

The upcoming UK Autumn Budget is expected to introduce significant tax changes as Chancellor Rachel Reeves seeks to address the £40 billion funding gap. We examine the rumoured tax reforms that could impact businesses and individuals, including potential changes to capital gains tax, inheritance tax, and employer National Insurance contributions.

Capital Gains Tax (CGT)

The Labour government is expected to raise CGT rates on shares and other assets, with the main rate increasing by several percentage points. Business Asset Disposal Relief could be scrapped, and ‘carried interest’ may be taxed at a higher rate, though not at the full income tax rate of 45% as originally proposed. Currently it is said that the CGT rate of second homes will not change and remain at 24% These changes could impact investors and private equity managers, but property CGT rates may remain unchanged.

Inheritance Tax (IHT)

Rumours suggest that inheritance tax reforms will focus on agricultural and business relief, possibly capping them at £500,000 per person. Restricting the ability to pass on family farms and businesses without IHT could have disastrous impact, resulting in many of these being wound up to pay the tax.  The extension of the seven-year rule to 10 years is also being discussed, to 10 years to make it more difficult for wealthier people to pass on assets without paying IHT. The possibility of including pension pots within the IHT scope, has also been discussed. Such changes could alter estate planning strategies for wealthy individuals and family businesses.

Employer National Insurance Contributions (NIC)

The largest tax hike of the Budget may come from an increase in employer National Insurance rates, potentially raising billions for the Treasury. Another option being considered is taxing employer pension contributions, which could add £17 billion in revenue but may lead to job losses and wage cuts, sparking opposition from business groups. 

Non-domiciled residents

The Autumn Budget may bring changes to the non-domiciled (“non-dom”) tax status. Although Labour initially aimed to scrap non-dom status entirely, recent reports suggest that Rachel Reeves might water down these plans, fearing wealthy individuals could leave the UK. Alternatives, such as a flat tax system or a Tiered Tax Regime, are being discussed to keep high-net-worth individuals in the country. These changes could have a significant impact on the UK’s ability to attract and retain foreign investment.

Other Potential Tax Changes

Speculation surrounds Labour’s plans to reform business rates and introduce measures to tackle tax avoidance and evasion. Additionally, there could be changes to stamp duty land tax, with buyers potentially having to face an additional £2,500 in Stamp Duty Land Tax. There are also suspected tax increases in the gambling sector and fuel duty; all aimed at raising significant funds to support public finances.

Furthermore, there have been suggestions of bringing profits from rental properties within the scope of National Insurance.

Stay informed

As the Chancellor prepares to deliver the first fiscal event under the new Labour government, these potential tax reforms could have wide-ranging effects on both individuals and businesses. It’s important to stay informed and plan accordingly, as these changes could reshape the UK’s financial landscape.

Join us for our Autumn Budget debrief on Thursday 7th November in Brighton & Hove with local MP Chris Ward, where we’ll explore the key announcements and their potential impact on individuals and businesses.