The Chancellor, Rachel Reeves, will present the first Budget of the new parliament on 30 October 2024. What might we see announced and what do we already know?
Key tax policies from Labour's manifesto
Labour's pre-election manifesto set out some tax key tax policies. These included:
- Closing non-dom tax loopholes.
- Investment in reducing tax avoidance, including more compliance officers and modernising processes.
- Applying VAT and business rates to private schools.
- Closing the carried interest tax loophole.
- Increasing Stamp Duty [sic] on purchases of residential property by non-UK residents by 1%.
- Introducing a windfall tax on oil and gas giants.
What has been announced so far?
Some changes have already been announced by the new government.
Reform of non-domicile taxation
- The abolition of the non-domicile tax regime is due from 6 April 2025.
- The new government is adopting the rules proposed by the last government for the replacement residence-based regime but intends that other perceived loopholes in the original proposals will be closed.
- See Non-domiciled individuals: 2024 proposals: At a glance
Abolition of the Furnished Holiday Letting (FHL) rules
- The FHL regime will be abolished from April 2025 for Income Tax, Capital Gains Tax and Corporation Tax.
- This will remove the ability of FHL businesses to benefit from several beneficial tax reliefs.
- See Abolition of the FHL regime: Briefing
Charging VAT on school fees and removal of business rates relief
- From 1 January 2025, all education services and vocational training supplied by a private school or a 'connected person', for a fee, will be subject to VAT at the standard rate of 20%.
- It is expected that from April 2025 the eligibility of private schools in England to business rates charitable rates relief will be removed.
- See VAT on private school fees and removal of business rates relief
Corporation and business tax
- On 3 September, Rachel Reeves Confirmed to Parliament that the Government will, at the Budget, "outline a tax road map for business ... to offer the certainty that encourages investment and gives business the confidence to grow".
- Rachel Reeves also made a commitment to "cap Corporation Tax at 25% for the duration of this Parliament and to retain Full expensing".
Making Tax Digital
- There will be a new 'Digital Transformation Roadmap'. HMRC is still engaged on beta testing the MTD for Income Tax Self Assessment, but there could be substantial changes.
- Following a highly critical report from the NAO, HMRC is being given the nudge to launch a consultation on electronic invoicing (e-invoicing) to promote its wider use across UK businesses and government departments.
What else is being tipped for change?
Speculation on what announcements will be made on 30 October 2024 is rife. Common suggestions include:
Income Tax and pensions
- Putting a limit on Income Tax relief for Pension contributions to a flat rate, such as 30%.
Capital Gains Tax (CGT)
- Increasing CGT rates, possibly to equal Income Tax rates.
- Introducing a fixed rate of CGT, i.e. taxing all gains at one fixed rate.
- Removing the market value Uplift on death.
- Capping the value of Private Residence Relief (PRR).
- Changes around the Carried interest rules to remove capital gains treatment where the economic characteristics are those of income. A Call for evidence on this was published in July 2024.
Motoring taxes
- Increases to fuel duty, Benefit In Kind rates for Company cars, and a 'pay per mile' road tax system.
Other taxes
- Increases in tax on alcohol and tobacco.
Inheritance Tax (IHT)
- Removing the beneficial IHT treatment of AIM shares.
- Capping the value of Agricultural Property Relief and Business Property Relief.
- Preventing defined contribution pension pots from escaping IHT on death.
The three IHT suggestions were made by the Institute for Fiscal Studies (IFS) in April 2024.
What is looking less likely to change?
- Plans to re-introduce the pensions Lifetime Allowance charge were dropped during the election campaign.
- The new Government made a pre-election pledge not to increase Income Tax, National Insurance or VAT.
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Budget representations
- Budget representations could be made via an online portal until 23:59 on 10 September 2024. See Make your Autumn Budget representations now
Useful guides on this topic
Finance Acts 2024-25 tax update and Rolling Tax Planner
This rolling planner tracks the key tax announcements that impact the 2024-25 tax year and beyond. This planner is updated on an ongoing basis.
Just how are our taxes raised and spent?
How does the UK raise its taxes? How does the UK spend its tax revenue? Which taxes raise the most revenue?
External links
Labour: Labour will not raise taxes on working people
Labour: How Labour will crack down on tax dodgers to fund our schools and NHS
Labour: Labour’s fiscal plan
