The Prime Minister, Sir Keir Starmer, has said that the October budget will be “painful” and the government would be making “big asks” of the country. He said that the country would need to be prepared to “accept short-term pain for long-term good” and that those with the “broadest shoulders should bear the heavier burden”.
However, no details were given about what the measures would be, other than Sir Keir reiterated that the rate of Income Tax, VAT and National Insurance would not go up.
So, what could change:
- Capital Gains Tax (CGT) – Current CGT tax rates are lower than Income Tax – could they be aligned?
- Inheritance Tax (IHT)- Could the government increase the 40% IHT rate and tinker with/remove some of the IHT reliefs that are currently available?
- The current tax thresholds – the personal allowance (£12,570) and the basic rate tax threshold (£37,700) have been frozen until April 2028 already. This will drag more and more individuals into paying more tax on additional investment income and/or increases in pay … will this be extended beyond April 2028?
- Pension Tax Relief – currently pension savers receive income tax relief at the highest rate of income tax they pay. There has been some speculation that a flat rate of Pension Tax Relief could be introduced.
If you are concerned about how the October budget may affect your situation, please call us on 01223 810100 for an initial chat. We are continually monitoring the position and will be listening in to the Chancellor’s first budget on Wednesday 30 October very closely.
