Autumn Statement 2024

Autumn Statement 2024

In the upcoming Autumn Statement on 30 October 2024, significant tax changes are expected as part of the Labour government's effort to address a £22 billion deficit in public finances.

Labour have previously confirmed that corporation tax rates are fixed until 2029 and are expected to be publishing their 'Business Tax Road Map' in due course. With a pledge to not increase income tax, National Insurance, or VAT, there has been widespread speculation as to which of the personal taxes will be targeted by Rachel Reeves to fill the deemed 'black hole' in the nation's finances. Below we note the areas most touted as likely to change, and the subsequent actions you may wish to consider with your tax adviser.

If you would like to discuss any of these changes further, please call your usual Corrigan contact or email hannah.larsen@corrigan.co.uk.

Additionally, you may wish to discuss the extent to which you can bring forward income or capital transactions, before the arrival of the 30 October statement. This will ensure that the transaction in question is subject to both current tax rates and appropriate reliefs. This could include, for example: paying dividends prior to the Statement, making gifts, or conducting asset sales. Such discussions and consequent planning will all be conducted with the purpose of obtaining certainty as to how your income/gains will be taxed.

  1. Increase to Capital Gains Tax (CGT) rates

    CGT rates have been markedly lower than those for income tax since 2008. Currently, the CGT rates are: 28% for carried interest, 24% for property, and 20% for other assets, whilst the highest income tax rate is 45%. Noting this disparity, it is predicted that CGT rates will be increased. However, those that are in practice, and recall the higher rates of the 1980s and 1990s, would hope this is accompanied by the reintroduction of an indexation allowance to account for inflation.

    An adjustment or removal of CGT reliefs may also be considered; for example, Business Asset Disposal Relief (formally known as Entrepreneurs Relief).

    Action:

    • If you are considering - or are in the process of - completing a capital transaction, you may want to expedite this to ensure the current CGT rates and reliefs apply.
    • Business owners should review how their assets are held in the event of a restriction, or even an elimination, of business-related reliefs.
  2. Pension Contributions

    Tax relief on contributions made could be restricted to the basic rate (20%) or a new flat rate (mooted 30%), reducing the effective rate of relief currently received by higher and additional rate taxpayers.

    Action:

    • Bring forward personal pension contributions. Note that you will need to be mindful of the Pension Annual Allowance and net relevant earnings limit.
    • This will be especially relevant for those whose earnings are derived from Furnished Holiday Lets (FHLs). These earnings will no longer be eligible for pension contribution purposes from 6 April 2025.
  3. Pensions

    You should keep these under review with your financial adviser, with particular attention as to whether you should (if you can) drawdown from this with the current 25% tax-free lump sum provision.

  4. Inheritance Tax (IHT)

    Whilst Labour have made no clear plans to adjust the IHT regime, it has simultaneously not made any pledges to keep it as it is. There are expectations that IHT exemptions, particularly for agricultural and business properties, may be reduced. Additionally, the ability to reset asset values for CGT purposes upon death may be eliminated, which would increase tax liabilities for beneficiaries selling inherited assets.

    The introduction of a wealth tax has also been considered by various groups in the last few years.

    Action:

    • If you were considering making gifts or re-shaping how your family's assets are held (e.g. Trusts or family companies), review with your adviser if these plans should be expedited. Your holistic personal financial profile must be kept in mind.

Our broad client base includes technology start-ups, business owners, international groups and non-profit making organisations. Whether you're an entrepreneur who needs advice with a new venture, an established business looking to make some changes, or a not-for-profit organisation seeking a more engaged accountant, we are here for you.

We see ourselves as an integral part of the businesses and larger communities which we serve, playing our part in a responsible and ethical way. This community ethos is woven into the fabric of Corrigan – ours is a small team of skilled and motivated accountants, building relationships at the regional, national and global level.

We're passionate about what we do. You'll find that we are as driven as you when it comes to striving for the best. Every service is tailored to meet your needs, offering you innovative and pragmatic solutions to whatever challenges you face.

Talk to us – we'd love to collaborate with you.