There’s a massive black hole to fill which seems to be getting larger. Both the Prime Minister and the Chancellor have already indicated that The October Budget will bring “difficult decisions” but what is the latest?
- Tax Implications for Employers: While Labour’s manifesto assured no tax hikes for workers, it left open the possibility of changes for employers. Will National Insurance Contributions (NICs) for employers see an increase? Rumours also include the possibility of charging employers NICs on pension contributions.
- Frozen Allowances: The personal allowance remains at £12,570, and income tax thresholds are still frozen. Is there a chance the Chancellor will extend this freeze beyond 2028?
- Potential Capital Tax Overhaul: Significant changes to capital taxes are anticipated. The Chancellor appears to be revisiting recommendations from the now-defunct Office of Tax Simplification, including:
- Extending the seven-year exemption period for potentially exempt gifts to ten years.
- Capping or abolishing the IHT exempt ‘excess income’ gifts.
- Increasing the £3,000 annual IHT exemption
- Tightening IHT Business Reliefs on some unquoted shares and diversified businesses—will your assets still qualify?
- Considering the inclusion of some pension values in the IHT estate.
- Capital Gains Tax Changes: There are suggestions that Capital Gains Tax (CGT) rates could rise, although not all assets may be impacted.
- CGT Uplift Concerns: Currently, inherited assets like shares or second homes are valued at the time of death, effectively erasing decades of capital gains. Could the CGT uplift be eliminated without a specific rebasing date or reinstating some form of inflationary relief?
- Other Rumoured Changes: There are talks of increasing fuel duty, freezing Stamp Duty Land Tax thresholds, and possible adjustments to Corporation Tax.
Traditionally, Chancellors reveal few details about tax plans before the Budget, but with numerous rumours circulating, it seems likely to be a challenging session. We’ll keep you updated as new information emerges.
