What do we think the new Chancellor of the Exchequer is going to announce?
It’s no secret this year’s Autumn Statement may well contain some sweeping changes to the UK tax code and fiscal legislation.
The new Chancellor of the Exchequer, Rachel Reeves, has made it clear that there are ‘difficult decisions to be made’, primarily due to the perceived £22 billion deficit in the public finances that the Labour Government has inherited from the previous administration.
Savings must be made and government revenues must be improved if the Government is to get the UK economy back on track in the medium to long term.
A quick rundown
So, what announcements are we likely to hear from the Chancellor on 30 October 2024? Here’s a quick rundown of some of the rumours, announcements and possible changes:
Proposed cuts to winter fuel payments for some pensioners
Cuts to the winter fuel allowance have already been passed in Parliament, with the possibility of further paring back of benefits across other welfare and social payments.
VAT on private school fees
The Chancellor has also announced that all education services and vocational training supplied by a private school, or a connected person, for a charge will be subject to VAT at the standard rate of 20%, from 1 January 2025.
No rises in taxes for working people
Rachel Reeves has made it clear that she won’t target taxes for working people, like income tax, NI or VAT. Keeping consumers spending and businesses trading will be vital to any kind of economic recovery.
Corporation tax changes not impossible
Back in February, Labour pledged not to increase corporation rates if elected to government. However, there’s potential for the standard rate of 25% to be reduced to make the UK more competitive.
Rises in capital gains taxation
While working taxes won’t be increased, there may be changes to some taxes, such as capital gains tax and inheritance tax. This could be bad news for business owners and high-net-worth individuals.
No introduction of a wealth tax
The Chancellor made it clear in the run-up to the General Election that a wealth tax was off the table, so we’re unlikely to see any changes to the higher bands of income tax in this Autumn Statement.
Changes to pensions
The annual total of the state pension will rise by £460 from April 2025, but key changes to private pensions legislation are also possible. This could involve restricting tax deductions on contributions to either the basic rate (20%), or possibly 30%. There could also be reductions in the amount that can be withdrawn tax-free from your pension, currently 25%, capped at £268,275.
More detail on changes to non-dom rule
Changes to the non-domiciled rules for UK business owners and high-net-worth individuals were previewed in July.
There could be more details around how the new Foreign Income & Gains (FIG) system will work and what the potential impact could be for owners with overseas assets.
Small businesses with employees
Any increases to employer’s NI and increases to employer’s pension contributions which will make the cost of employing people even more of a burden for small business (National Insurance on employer pension contributions could raise billions for Treasury coffers).
There are also the proposed changes to workers’ rights that Angela Rayner is determined to bring in which may also affect business (Rayner meets businesses and unions on workers' rights).
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