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In the biggest tax raising budget in the last 30 years, Rachel Reeves, in her first Budget (and the first by a female Chancellor) announced a number of tax increases to deliver £40 billion per annum as part of her drive to restore stability in the economy, to fix the foundations, to deliver change and help plug the black hole claimed to have been left by the last Government.
Given that the Labour election manifesto committed that taxes would not increase for working people, the most significant measure announced by the Chancellor impacts employers, with an increase in Employers’ National Insurance Contributions (NIC) and reduction in the earnings threshold from which this is paid from April 2025. It remains to be seen whether these two changes really will increase the Treasury’s yield by the £23 billion per annum that it forecasts.
Prior to the Budget, there was significant debate on what might happen with Capital Gains Tax. Whilst rates were increased, these increases were not as high as many expected with Business Asset Disposal Relief continuing to be available for those that qualify albeit with the effective CGT rate increasing from 10% to 18% over the next two tax years for the first £1m in lifetime gains.
The sweeping changes being introduced for Inheritance Tax (IHT) reliefs and to bring pensions into the IHT tax net are going to change the landscape of family succession planning for generations to come and will mean that virtually everyone needs to reconsider the structure of their planning.
These are informative guides of the different tax changes for this year.
