Autumn Statement 2024: What Could Be Announced?
It’s no secret this year’s Autumn Statement may well contain some sweeping changes to UK tax and legislation. With a new Chancellor of the Exchequer, Rachel Reeves, we’re likely to see a shift in approach – especially given the current £22 billion deficit in the public finances.
Reeves has made it clear that ‘difficult decisions’ lie ahead. Savings must be made, and government revenues improved, to get the UK economy back on track. But what exactly could be on the horizon? Here's a breakdown of some of the possible announcements we might hear on 30 October.
1. Proposed Cuts to Winter Fuel Payments for Some Pensioners
Cuts to winter fuel allowances have already been passed in Parliament, and there’s speculation about further reductions across other welfare and social benefits. This is part of the government’s plan to trim costs and address the budget shortfall, though it could leave many pensioners feeling the pinch this winter.
2. VAT on Private School Fees
From 1 January 2025, all education services and vocational training supplied by private schools, or connected individuals, will be subject to VAT at the standard 20%. This change will undoubtedly impact families using private education and could reshape the landscape of schooling in the UK.
3. No Rises in Taxes for Working People
One piece of good news (depending on how you look at it) is that there are no planned rises for income tax, National Insurance, or VAT. Rachel Reeves has made it clear she won’t target working people, as keeping consumers spending and businesses trading is essential to any economic recovery.
4. Corporation Tax Changes
Labour pledged earlier this year not to raise corporation tax rates, but with everything on the table, there's speculation that they could reduce the standard rate of 25% to make the UK more competitive. It’s a delicate balance between stimulating business growth and ensuring the public purse is filled, so this will be one to watch closely.
5. Rises in Capital Gains Taxation
While working people won’t see tax hikes, Reeves may look to capital gains tax and inheritance tax as a way to bolster government revenues. This could mean bad news for business owners and high-net-worth individuals, who may face increased tax liabilities on their assets.
6. No Introduction of a Wealth Tax
There were rumours of a wealth tax circulating before the General Election, but Rachel Reeves has been firm that such a move isn’t on the table. Higher income tax bands are likely to remain untouched, which might offer some relief to those concerned about this potential revenue-raising measure.
7. Changes to Pensions
State pensions will rise by £460 annually from April 2025, but private pensions might not escape untouched. Key changes could include restricting tax relief on contributions to the basic rate of 20% or potentially 30%. Additionally, the 25% tax-free withdrawal limit – currently capped at £268,275 – may be subject to new restrictions. These reforms would change the game for those saving for retirement, so it's important to keep an eye on this.
8. More Details on Changes to Non-Dom Rules
In July, changes to the non-domiciled rules were previewed, and we’re expecting more clarity on how the new Foreign Income & Gains (FIG) system will work. For UK business owners and high-net-worth individuals with overseas assets, this could have significant implications.
What Should You Do?
There’s no doubt that this year’s Autumn Statement will bring changes that could affect both individuals and businesses. As always, at Navigate Accountancy, we’ll be here to guide you through the fine print and help you understand what these new measures mean for you.
In the days following the Autumn Statement, we’ll be publishing a detailed breakdown of all the major announcements on our blog – so stay tuned! If you have any questions in the meantime, don’t hesitate to reach out. We’re here to help you navigate through the changes and make sure you're prepared for whatever comes next.
