The Budget 2024 is nearly here. This will be the first by a Labour Government since March 2010. Much is to be anticipated in The Budget for a number of reasons. The first is being a promise by the Labour Government to change spending, amid a "black hole" in the countries finances. As well as this, there has been speculation of "doom and gloom" surrounding what is to be announced, with some measures kicking in straight away from the October 30th announcement, while most will apply from the start of the new tax year in April 2025.
Within this piece, we will take a look at what has been confirmed so far, as well as what has been speculated to change in the coming months. This again is just an opinion piece, we will clearly make you aware of what has been confirmed, and what is said to be speculation.
At a Glance
Labour are expected to make some tough (and not necessary agreed with) decisions (with some of those already shown with regards to the Winter Fuel Allowance).
Capital Gains Tax (CGT), Inheritance Tax and Property Tax, as well as some reliefs are all speculated to increase to raise funds to plug the "black hole" in finances.
While much of this is speculation (and there is a lot of fear around this budget), it is always recommending to review your situation with a professional (either your legal counsel or financial planners).
What has been confirmed for The Budget 2024 so far?
There have been a few things confirmed before The Budget 2024 is announced. Prior to the election, Labour committed to:
changes to the taxation of non-domiciles (non-doms), although without certain rules
charging VAT and business rates on private schools
increasing stamp duty on residential property purchases by non-UK residents. This is set to be an increase of roughly 1% .
But Labour has ruled out:
increases in tax for ‘working people’ i.e. headline rates of income tax, NICs and VAT; and
increasing corporation tax above 25%
We also believe that there has been a confirmation on the removal of tax advantages on furnished holiday lettings which was first announced in the Spring 2024 budget and now confirmed by the current chancellor.
The removal of the furnished holiday lettings (short-term lets, Airbnbs etc) now brings it in line with standard residential letting rates.
What has been speculated to change in The Budget 2024?
Capital Gains Tax (CGT) An increase in Capital Gains Tax is expected, but by how much is open to speculation. Some commentators are saying that Capital Gains Tax could increase to the same rates as Income Tax, with a higher and lower rate. This is therefore going to make selling investments, properties and businesses more costly as more Tax will now be paid once these assets are sold off.
Business Asset Disposal Relief (BADR)
Currently there are reliefs in place that if you sell your business, that take you into a higher tax bracket, you may qualify to a tax relief. This is most relevant to those sole trading or working in a partnership, in which it is then sold off. However speculation is that the relief may be reduced or simply eliminated within The Budget 2024.
Inheritance Tax (IHT)
This area of tax is extremely complicated with different reliefs, different areas of tax, and different scenarios that all affect Inheritance. Speculation from commentators is that this is an area the government will focus on. There has been speculation that reliefs to Agricultural land could be affected, that Capital Gains Tax may be introduced on disposal on death (likely related to property) and that IHT exemptions for residuary pension funds may be removed.
Landlord Tax
Landlord tax is also an area that could potentially be introduced in The Budget 2024. What is being suggested is that tax is set to increase on profits made by landlords. Currently, landlords only pay Income Tax on profits made from rental properties. However it has been suggested that they may need to pay National Insurance Contributions on those profits going forward.
Others
Labour has previously pledged to introduce measures such as support for First Time Buyers to give "locals" first dibs on new properties. We do believe this will be more relevant to England. Some Green Belt areas may be re-categorised to grey areas so that more land is available to cope with the demand for housing within the UK. Again, this may be specific to England / mainland GB but we will be watching. There is also speculation that there will be a revaluation of properties, but this is relevant to council tax, which we belief won't affect the rates system that is currently in place in Northern Ireland.
It is worth noting that some of these measures will be based for the mainland / England and not be relevant to Northern Ireland. Some of the measures may be introduced to Northern Ireland, but may do so at a later date due to devolved issues.
Conclusion
Many commentators who have been researching, watching and waiting in anticipation for The Budget 2024 are speculating at least a mixture of some of the above. Now the "doom and gloom" message that started, has been relaxed slightly over the last few weeks, but we are expecting some tough decisions to be made.
Key Takeaway - Most analysts are agreeing that Inheritance Tax, Capital Gains Tax and Business Relief will increase / disappear. This is most relevant then to those with property, land, agricultural land, businesses and investments. Therefore, Future Planning will become more important for those individuals.
What is also expected is a slight increase in taxes raised as people begin to take advantage of the potential short window to avail of the current taxes that are in place, before new rates and reliefs disappear.
If you are concerned about the upcoming budget and / or with some of the measures set to be introduced, ensure that you speak to a trained professional who can guide you.
If you require a solicitor in Northern Ireland, contact with us today.
Please note that this blog post was produced on September 26th and that some of the contained information may have changed before The Budget 2024 announcement
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