Potential Tax Changes in the Upcoming Autumn Budget

As the first Autumn Budget under Labour’s leadership draws closer, businesses across the UK are anticipating potential tax changes. While it’s too early to predict specifics, it’s vital to stay informed and be prepared for possible shifts that could affect your finances. In this blog, we explore the likely Autumn Budget tax changes and their implications for individuals and businesses alike.

Key Speculations for the Autumn Budget

With over 25 years of experience in tax, I have never seen as much speculation surrounding an Autumn Budget as we’re witnessing this year. While some sources seem to delight in portraying doom-laden scenarios, there are important aspects to consider based on current trends.

Tax increases seem inevitable, with everyone likely to share the burden. However, significant or unexpected tax hikes could destabilise the economy, so the government may tread cautiously. Below are some potential changes we anticipate, although these should be taken with a degree of caution.

Potential Changes to Income Tax

One of the most anticipated changes in the Autumn Budget is the potential rise of the top income tax rate back to 50%. This move would impact high earners and could result in a review of personal financial strategies.

There’s also speculation that National Insurance could be merged with income tax, although this change may not occur until April 2026, due to the legislative groundwork required. If introduced, the basic rate of income tax could be set at 25%, 26%, or 27%.

Expected Adjustments to Pensions

Pensions are another area expected to see adjustments. From 2025/26 onwards, we may see the annual allowance reduced to £25,000, with no changes anticipated to tax-free lump sums. Additionally, employers’ pension contributions could become subject to National Insurance Contributions (NIC), adding a new layer of complexity for employers.

Inheritance Tax and Capital Gains Tax Revisions

Regarding inheritance tax, it’s rumoured that the residential nil-rate band could be scrapped, while the regular nil-rate band may increase. Eligibility rules for business investment relief could tighten, with longer holding periods required. Caps on pension funds and lifetime gifting exemptions are also possibilities.

For capital gains tax, aligning the rates with income tax bands seems likely, but taper relief could return, benefiting those holding assets for longer periods. The minimum CGT rate could rise to 20%, up from the current 10% for business asset sales and basic rate taxpayers.

Corporation Tax: What to Expect

On the business front, corporation tax rates are expected to remain unchanged for now. However, there could be adjustments to annual investment allowances, research and development reliefs, and other initiatives that aim to stimulate enterprise growth, with some of these changes possibly being advantageous.

How We Can Help

Navigating tax changes can be overwhelming, especially with the potential for significant updates in the 2024 Autumn Budget. Our team of Chartered Accountants and Tax Advisers, based on the South Coast, is here to help you stay informed and respond proactively. Whether you need advice on income tax, pensions, or corporation tax, we provide tailored support to ensure you remain compliant and optimise your tax position.

For personalised guidance, contact us today, and let us help you stay ahead of the changes.