What to Expect from the New Government’s Budget

With a new government now in place, the tax budget date has been set for 30 October 2024. Early announcements from the Chancellor indicate that the state’s financial deficit is larger than anticipated, fuelling considerable speculation about potential new tax measures.

Although the Labour Party’s manifesto promised not to increase taxes for “working people,” the exact definition of a working person remains unclear. Dolman’s Bristol Accountants are advising their clients to remain vigilant, as the impact of any new tax measures could vary widely depending on individual circumstances.

While no increases to income tax or national insurance rates have been signalled, there has been no confirmation on whether personal allowances and tax bands will be adjusted in line with inflation. Fiscal drag has already been a concern for several years, and Dolman’s Bristol Accountants are monitoring developments closely to ensure clients are prepared for any changes.

One certainty is that VAT will be applied to private school fees at the standard rate starting in January 2025. Anti-avoidance measures are expected to accompany this change to prevent schools and parents from avoiding VAT by issuing early invoices for post-January 2025 fees. However, it remains unclear whether any exemptions will be provided for schools catering to students with additional learning needs, such as disabled children.

Capital taxes may also undergo significant reform, particularly inheritance and capital gains tax. Speculation suggests that inheritance tax reliefs, such as business property relief and agricultural property relief, may be at risk of abolition or reform. Likewise, there is discussion that capital gains tax rates, which are currently lower than income tax rates, could be aligned with income tax rates. Additionally, some business reliefs, including business asset disposal relief, gift relief, investors relief, and rollover relief, may face reform, which has prompted Dolman’s Bristol Accountants to advise clients to seek early guidance to mitigate risks.

Forestalling provisions are also anticipated to be introduced, aimed at preventing individuals from exploiting any potential tax gaps. Dolman’s Bristol Accountants have been working with clients to ensure compliance with current rules and to prepare for possible changes.

The last Conservative budget outlined plans to abolish furnished holiday let tax provisions by April 2025, scrap the non-domiciled remittance basis, and shift inheritance tax to be charged on a residence rather than a domicile basis. However, details remain vague, and further clarity is expected in the upcoming 30 October 2024 budget.

If you are concerned about how these changes could affect your financial situation, Dolman’s Bristol Accountants are here to help. Whether you need compliance assistance or tax planning advice, feel free to get in touch with us for professional support tailored to your needs.