Preparing for Labour’s First Post-Election Autumn Budget Announcement

Since Labour’s recent win in the 2024 UK General Election and the speech made by the Prime Minister yesterday, there has been much speculation ahead of the new Chancellor of the Exchequer’s first Autumn Budget Statement which will be delivered on 30^th October, accompanied by a full fiscal statement from the Office of Budget Responsibility (OBR).

Many people are mindful that Labour’s manifesto committed not to increase “working taxes”- namely national insurance, VAT and income tax – as well as campaigning on delivering a boost to economic stability and growth.

Theming across both yesterday’s announcement from Keir Starmer, and Chancellor Rachel Reeves’ recent discussion on the News Agent podcast warned of “difficult decisions to come” and “increases in taxes” which has left many media outlets speculating on what may be included in the upcoming “Halloween budget”.

As we all know, the money must come from somewhere, and there are three key areas of discussion taking place that we should highlight ahead of any confirmed changes.

The annual exemption has already been significantly dropped under the Conservative government, which is something we have covered frequently in our newsletter updates previously.

Some have speculated a movement towards the alignment of Capital Gains rates with Income Tax, and others have predicted an introduction of different tax rates for different assets including residential property, investment and business assets. Any such change as this would likely affect financial planning for many, however, we are already in contact with clients who may be affected by the speculation and will be on hand to assist should we see any further updates here and keep you well informed.

You may have also heard of a rumour circulating in the lead-up to the election of an introduction of Capital Gains Tax on the disposal of a primary residence, which rightly caused concern for many. However, it is the belief that this was put to rest in June when ruled out by Keir Starmer.

Whilst there was no other reference to Inheritance Tax changes in the Labour manifesto, it has been reported that Labour are drawing up tax-raising options that include changes to Inheritance Tax – of which £7.5bn was collected in the financial year April 2023 to March 2024.

Some reports suggest this could relate to changing the rules for Business Relief and Agricultural Relief, to raise tax revenue without changing the headline rates of IHT, or changes to lifetime gifts where currently no IHT is due should the person live for 7 years or more after gifting.

Labour have also previously ruled out a re-introduction of the Lifetime Allowance charge. However, it is seen to be more likely that a reduction of the Lump Sum Allowance (LSA) may appear, or perhaps addressing the taxation of pensions on death.

The Chancellor has previously campaigned to reduce tax relief for pension contributions for high earners, suggesting a flat rate of relief would “boost for basic rate taxpayers” and reduce the “subsidy for higher earners”, and the King’s speech also signalled that Labour wishes to “unlock growth” in pensions, so we highly anticipate some mention of pensions within the Autumn Budget for 2024.

Firstly, for now all we have is speculation and assumptions, with no concrete changes, rates or plans confirmed. Therefore, if you have concerns then I would speak to your financial adviser and they will be able to look at your individual circumstances.

It is, however, sensible to make the most of your planning opportunities and the tax reliefs currently available. For example, for higher earners, it may be worth considering topping up pension contributions. If you have some gains you intend on crystallising, perhaps consider this ahead of possible changes.