It is unusual for a Chancellor to make tax changes in a budget and backdate these to take effect before the budget announcements are made. In this article we take a look at any pre-budget planning opportunities that might exist.
When Rachel Reeves steps up to the dispatch box to present her first budget on 30th October, the likely dates from which any changes are effective will probably be:
From the 30th October 2024
From April 2025 or some later date.
The comments we have made below are necessarily speculative, we do not have a crystal ball, but they are based on informed commentary in recent months as our new government seeks to plug the hole in government finances and keep to its promise to avoid any changes to income tax, National Insurance and VAT.
If any of the points raised have relevance to your personal or business finances please call so we can help you consider planning options available to action before 30th October 2024.
Pre-budget planning – Capital gains tax (CGT)
At present, CGT on chargeable asset disposals is charged at rates that are below income tax rates. It is possible that the budget will seek to tax these gains, perhaps from 30th October, at income tax rates.
There are also a number of CGT reliefs – including the Business Assets Disposal Relief which allows qualifying gains to be taxed at 10% – which could be withdrawn. If you are considering the disposal of an asset, you might be advised to consider acting before the budget date.
Pre-budget planning – Inheritance Tax (IHT)
Likewise, the Chancellor may withdraw reliefs that presently exempt business assets from your estate.
She may also reduce or withdraw the option to make lifetime gifts and take advantage of the present Potentially Exempt Transfer rules that remove the value of the gift from the donor’s estate if they live for seven years after making the gift.
Take advantage of the present IHT reliefs before the budget date.
Pre-budget planning – Mansion or Wealth taxes
There has been speculation that Labour may be tempted to introduce either or both of these taxes to raise revenue. Taxing personal assets in this way is fraught with administrative difficulties, not least of which would be an annual valuation of assets.
No planning options, we will have to wait and see if the Chancellor grasps this particular nettle or settles for less expensive tax increases.
If you would like to speak to a member of our tax team regarding any tax planning opportunities that might be available to you, please contact us on 020 7870 9050.
