What can we expect from the UK 2024 Autumn Budget?
.jpg)
We are just under 2 weeks away from the Budget on 30th October, and the Labour Government has already signalled that it will be ‘painful’.
With a lot of economic uncertainty from what will arise during the Budget, Ruzwan Boota, Tax Director at I Will Solicitors provides a breakdown of what could be expected on 30th October.
(I Will Solicitors Ltd is a wholly owned subsidiary of Wahed Inc. They provide Islamic Wills, Probates and Tax Advisory services).
The current tax-burden in the UK is at a post-WWII high, and many of the taxes are already as high as they can possibly be without the risk of reducing tax intakes due to changing behaviours. So whilst changes are expected to increase tax-take further, we feel that they will not be as dramatic as being feared by some, as you can tell from the predictions below:
1. Capital Gains Tax (CGT):
This is the key area which a lot of the rumours are focusing on as the Government have refused to rule out changes to CGT. Some people are saying that it will rise to 39% so that it is more closely aligned with income tax rates, but we can’t see this happening as HMRCs own modelling shows that an increase to say 30% would lead to a loss of £2bn in 2027/28. Remember that CGT is a transaction tax, so people can decide as and when they want to make disposals, and therefore as and when they want to pay the tax.
We expect there to be a CGT rise, but perhaps back to 28% for residential properties, and 24% for all other capital assets. There could also be some further restrictions around certain reliefs such as Business Assets Disposal Relief (previously called Entrepreneurs Relief), but the Government will need to balance this with continuing to incentivise businesses to grow.
We also have a sneaky feeling that a CGT rise (particularly if they choose a higher CGT rate) may come into effect from April 2025 to help net a boost in tax take between now and April, as it will incentivise people to make disposals ahead of a certain tax rise. But let’s see what is announced.
2. Exit Tax
There have been lots of fear mongering about Exit Taxes, and thankfully it appears that these rumours have been quashed by Treasury insiders. So that means anyone who was worrying about this as part of their plans to become non-UK tax resident , can breathe a sigh of relief.
3. Inheritance Tax (IHT)
This is another tax which the Government has refused to rule out changes to, but considering that IHT makes up only approx. 0.3% of GDP, it is hard to see this being a key area of focus for big changes.
We perhaps see some tweaks to the tax-free CGT uplift on death by replacing it with a hold-over relief – particularly for assets that are already exempted from IHT (for example, shares in trading businesses).
There are also some rumours that there could be some changes to Business Relief (BR) as this is one of the key reliefs used by many business owners. But when the growth of the economy will rely on the growth of businesses, it is hard to see anything too significant as the last thing they will want to do is disincentivise businesses from locating and growing in the UK.
4. Income Tax Thresholds
Whilst the Government has ruled out increasing income tax rates, they haven’t ruled out a change in the thresholds (the wording of what they say is very important!). We predict that there could be a reduction in the additional rate threshold from £123k to £100k, and thus a removal of the taper.
5. Pension Tax Relief
At the moment, pension contributions are fully tax deductible, which means that 45% tax payers get 45% tax relief on the pension contributions. There are lots of rumours in the press that a flat rate of tax relief can be introduced, say between 20% and 30%. This would raise significant amounts of tax for the Government, whilst still providing some incentive for pension saving (whilst admittedly less than under the current legislation).
6. Non-Dom Tax Regime
The Conservatives had already announced that they wanted to make changes to the non-Dom regime, and the Labour Government followed this up with a commitment to do the same. However, the studies that these decisions were based upon were narrow in their scope and based on many assumptions, so there are worries in the Treasury that the non-Dom changes may not raise any tax at all. Considering that any significant changes to the non-Dom regime will likely disincentivise wealthy individuals from coming to and investing in the UK, and also accelerate an exodus of wealthy individuals from the UK – there is a chance that the changes could be lighter than initially anticipated.
We suspect that the Government will take a little more time making tweaks to this to try and ensure that they hit the sweet spot with any changes proposed.
7. Corporation Tax
The Corporation Tax rate in the UK is currently between 19% and 25%. We imagine this staying as it is, however, we have a sneaky feeling that a flat rate of corporation tax could be introduced for disposals of properties within companies at say 25%. Since 2016, many property investors (rightly or wrongly) have been moving portfolios into limited companies because of the tightening in the tax regime on property landlords. We see the above change as a further extension to that.
Of course, the above are just our predictions at this stage, and we will share updates with you all as soon as the Budget is announced.
Discuss how the budget can affect you
If you would like to discuss planning opportunities in the wake of the upcoming Budget, we are offering free 30 minute meetings with the Tax Director at I Will Solicitors , Ruzwan Boota, and Wahed’s Head of Private Clients Services UK, Abul Fazal Salahuddin. If you would like to book in a meeting, please do so using the following link.
Risk Warning: Equity investments are not readily realisable and involve risks, including loss of capital, illiquidity, lack of dividends and dilution, and it should be done only as part of a diversified portfolio. Investments of this type are only for investors who understand these risks. You will only be able to invest in the company once you have met our conditions for becoming a registered member.
Please visit www.wahed.com/uk/ventures/risk for our full risk warning.
Risk Warning: As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
Please visit www.wahed.com for our full terms and conditions
Maydan Capital Limited, trading as WahedX, is registered in England and Wales (Company No. 13451691), registered office: 87-89 Baker Street, London, W1U 6RJ, UK. Maydan Capital Ltd (FRN: 963613) is an appointed representative of Wahed Invest Ltd (FRN: 833225), an authorised and regulated firm by the Financial Conduct Authority.Wahed Invest Ltd. is registered in England and Wales (Company No. 10829012), registered office: 87-89 Baker Street, London, W1U 6RJ, UK and is authorised and regulated by the Financial Conduct Authority: FRN 833225.
Subscribe For More Islamic Finance Content
As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
Wahed Invest LLC (Wahed) is a US Securities and Exchange Commission (SEC) registered investment advisor. Wahed Invest provides brokerage services to its clients through its brokerage partner Apex Clearing Corporation, a member of NYSE - FINRA - SIPC and regulated by the SEC and the Commodity Futures Trading Commission. Registration does not imply a certain level of skill or training. Wahed does not intend to offer or solicit anyone to buy or sell securities in jurisdictions where Wahed is not registered or a region where an investment practice like this would be contrary to the laws or regulations. Any returns generated in the past do not guarantee future returns. All securities involve some risk and may result in loss. Any performance displayed in the advertisements or graphics on this site are for illustrative performances only.
Disclaimer: Wahed Technologies Sdn Bhd ("Wahed") is a Digital Investment Manager (DIM) licensee issued by Securities Commission Malaysia (eCMSL/ A0359/2019). It is part of Wahed Inc. Wahed is authorized to conduct a fund management business that incorporates innovative technologies into automated portfolio management services offered to clients under a license issued pursuant to Schedule 2 of the Capital Markets Services Act 2007. All investments involve risks, including the possibility of losing the money you invest, and the track record does not guarantee future performance. The history of returns, expected returns, and probability projections is provided for informational and illustrative purposes, and may not reflect actual future performance. Wahed is not responsible for liability for your trading and investment decisions. It should not be assumed that the methods, techniques, or indicators presented in this product will be profitable, or will not result in losses. The previous results of any trading system published by Wahed, through the Website or otherwise, do not indicate future returns by that system, and do not indicate future returns that will be realized by you.
Wahed Invest Limited is regulated by ADGM’s Financial Services Regulatory Authority (“FSRA”) as an Islamic Financial Business with Financial Services Permission for Shari’a Compliant Regulated Activities of Managing Assets and Arranging Custody [Financial Permission No. 220065]. Our ADGM Registered No. is 000004971. Wahed Invest Limited utilises Abu Dhabi Commercial Bank as its banking partner/custodian
Wahed assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. Any strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. Furthermore, the information presented may not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance.
There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services and should seek advice from an independent advisor before acting on any information presented. Any links to third-party websites are provided strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites nor do we endorse the content and information contained on those sites. When you access one of these websites, you are leaving our website and assume total responsibility and risk for your use of the third-party websites.
