UK Autumn Statement: Labour’s 2024 Budget Expected to Be “Painful”
By Antler Wealth Management
October 2024
Labour, now in power, is expected to address its key campaign promises such as boosting minimum wage, expanding childcare, providing free school breakfast clubs, and helping first-time buyers. However, Sir Keir Starmer has warned that their first budget on October 30th will be "painful," requiring short-term sacrifices for long-term benefits. This follows Chancellor Rachel Reeves’ discovery of a £22 billion funding gap in the current budget, which the Conservatives dispute.
Labour, committed to the pensions triple lock and against raising income tax, VAT, or National Insurance, will need to adjust other areas of taxation to raise revenue.
Income Tax
Income tax, the largest revenue source, will raise £303 billion this year. Although rates may not rise, thresholds could be lowered, pushing more earners into higher tax brackets.
Capital Gains Tax
While capital gains tax on primary homes remains exempt, rates could rise or the threshold could be lowered, impacting second homeowners, landlords, business owners, and investors.
Stamp Duty Land Tax
No major changes are expected, but a planned £1.5 billion increase in 2025 is already scheduled, reverting previous cuts.
Pensions
Pension tax relief may be reduced to the basic income tax rate, potentially raising £15 billion annually. There is also discussion about changes to the 25% tax-free pension withdrawal and inheritance tax rules for private pensions.
Inheritance Tax
Only 4% of deaths trigger inheritance tax, yet it generates £8 billion annually and is often criticized as double taxation.
Currently, individuals can pass on £500,000 tax-free (£1 million for couples) if property is left to their children. The Chancellor may reduce this exemption or change reliefs that allow early transfers of wealth without paying tax.
Britain's 40% inheritance tax applies to estates over £325,000, a threshold frozen since 2009. Rising property values have caused more estates to be taxed. There is also a possibility that private pensions could become subject to inheritance tax.
Ending The Non-Domicile Regime
Labour is expected to continue the proposed discontinuation of the non-domicile regime, initially announced by the Conservatives. A change that will result in all UK residents being subject to tax on their worldwide income, whatever their domicile.
Professional Advice
Labour intends to raise taxes to fund its public service initiatives, which will likely lead to changes in long-standing taxes, allowances, investment schemes, and regulations—potentially impacting investors and their portfolios. To safeguard and grow your assets, personalized financial planning is essential.
With offices in London, Dubai, and Singapore, we are well-positioned to help you navigate these changes based on your unique asset base and residency.
Please contact us at antler@sjpp.co.uk to arrange a meeting and discuss further.
Antler Wealth Management
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