With a reported £22 billion financial gap, the Government is under pressure to make significant changes. As we await the 30th October announcement from Chancellor Rachel Reeves, businesses and individuals should prepare for potential tax changes aimed at plugging this gap.
What Could Be Included?
1. Inheritance Tax (IHT)
Changes to IHT could involve reducing the nil-rate band or adjusting Business Property Relief (BPR) and Agricultural Property Relief (APR). This may increase IHT liabilities for more estates.
2. Capital Gains Tax (CGT)
We may see an increase in CGT rates on certain asset sales, while reliefs like Business Asset Disposal Relief (BADR) could also be revised, potentially affecting entrepreneurs looking to exit businesses.
3. Employers’ National Insurance
While Labour’s manifesto ruled out increases in key taxes on working people, this Budget might see a rise in Employers’ National Insurance rates, potentially increasing the cost of employment.
Pensions and Tax Relief
The Government could look at reforms to pension tax relief, including the possibility of replacing higher rate relief with a flat rate or revisiting the tax-free lump sum withdrawal rules.
Business Taxation Roadmap
A long-term taxation roadmap is expected to be unveiled, offering clarity on corporation tax rates, capital allowances, and business rates. The corporation tax rate will likely remain at 25%, but thresholds for this rate may be reviewed.
Other Potential Changes
- Dividend Allowance: This may see further cuts from the current £500 allowance.
- Fuel Duty: With rates frozen since 2011/12, an increase in fuel duty could be announced.
- Benefit in Kind: Potential tax increases on employee benefits like company vehicles could be introduced, especially for high CO2 emission vehicles.
Stay tuned for Cutts & Co’s post-budget analysis, where we’ll break down how the announcements will impact businesses and individuals.
