Autumn Budget Announced for 30 October
The new Labour government will announce its first budget on 30 October 2024. Chancellor Rachel Reeves has stated her intention to make several changes. This budget is highly anticipated, with many changes predicted.
Labour’s election manifesto promised not to increase income tax, national insurance contributions or VAT. The Chancellor has confirmed that this pledge remains in place. She does, however, need to address the £22bn ‘black hole’ uncovered in treasury finances since she started her new role in early July. Steps have been taken by changing winter fuel allowance eligibility and cancelling some public sector projects. Further decisions will be made to ‘fix the foundations of our economy’.
What do we know about the budget so far?
Key changes have already been announced. These involve:
- Furnished holiday lets (FHL) – new legislation will abolish the FHL tax regime. Instead, income and gains from FHL properties will form part of a person’s UK or overseas property business. This means FHL income gains will be treated in line with those from other properties.
- VAT on private school fees – the government is ending tax breaks for private schools, helping to raise revenue to fund state education priorities. This includes removing the VAT exemption on private school fees, affecting fees paid from July 2024 for the school term starting January 2025. Education and boarding services provided by private schools for a fee will be subject to VAT at 20%.
- Non-dom taxation – non-doms are individuals whose permanent home, or domicile, is considered to be outside the UK. The current non-dom regime is a favourable tax regime which allows non-doms who are UK resident to opt to use the remittance basis of taxation. (gov.uk) The four-year regime created by the previous government remains however transition rules have been revised. The 50% allowance planned for remittance-based non-doms in the first year has been abolished. Further announcements regarding inheritance tax and trusts are expected.
- Carried interest taxation – carried interest is a form of performance-related reward received by fund managers, primarily within the private equity industry. The government intends to act against this loophole by engaging with expert stakeholders in deciding a way forward.
Some changes are known – others will emerge nearer to or on 30 October. It’s best to be proactive, to review your finances and practices – personal and business – now. What steps can you take to ensure you continue to pay minimal tax while complying with HMRC regulations and anticipating future changes?
Talk to the friendly tax experts at Hargreaves Owen accountants near Baldock, Letchworth and Hitchin. Enjoy an initial discussion without obligation … we’d love to help you pay less tax and be budget-ready.