Boxed in by Labour’s manifesto pledges not to increase income tax, employee’s national insurance and VAT, Chancellor Rachel Reeves instead had to raid other taxes, like capital gains tax (CGT), inheritance tax (IHT), employer’s national insurance and to extend the tax threshold freeze to find the £40bn needed to balance the books.
While the tax rises came thick and fast, the Chancellor announced there would no longer be biannual fiscal events. The Budget will now only be in the autumn, while the Spring Statement will have no tax changes.
Reeves said the tax-and-spend Budget was necessary to reverse the dire state of the public finances the Government inherited and to “fix the foundations to deliver change”.
“This Government was given a mandate to restore stability to our economy and to begin a decade of national renewal, to fix the foundations and deliver change through responsible leadership in the national interest. That is our task. And I know that we can achieve it,” said Reeves at the start of her Budget statement.
So what did the Lambert Chapman team think of the announcements?
Lucy Orrow – Tax Partner
“Looking at each section in isolation, the news doesn’t appear too impactful, but collating it together shows that employers will be hugely affected. We were all expecting some tough news, but it will take some time to digest all the information being released”
Lucy Orrow – Tax Partner
“Earning a living in the agricultural sector is becoming harder and harder with the reduction of subsidies and being at risk of price changes due to the global economy that sets input and output prices. Families are now faced with an increase in Inheritance Tax”
Craig Weavers – Partner
“As a Nation, we have a terrible record of overspending and underdelivering when faced with such grand spending schemes (HS2 anyone?), so this Government needs to ensure that we actually get value for money”
Mike Carabine – Senior Manager
“Great to see no change in Corporation Tax, but this doesn’t help businesses due to the additional employment costs now being levied on them instead which as the HR and Payroll Partner, I always have a keen interest in understanding”
Lisa Greenwood – Partner
“The reduction in the reliefs will be a major blow to business owners who have worked hard throughout their lives to grow their businesses, only to see that a proportion of what they have worked for to be taken away by the government”
Luke Mitchell – Partner
“The government has pledged to recruit 5,000 additional staff, with investment into outdated HMRC systems. I cannot help but feel that if the existing staff went back into the office, the level of service may be better than the current state of affairs”
Mark Pearson – Partner
“My big employers will now be faced with huge cost increases at a time when they might be in the middle of fixed-price contracts and struggling to deliver the workforce sizes required following Brexit”
Nick Forsyth – Managing Partner
Sean Wiegand – Partner
“Pension funds have been hit hard. Currently, undrawn funds in defined contribution pension schemes at the date of death are outside the estate for IHT and many people have paid into a pension on the basis that it is outside of the scope of IHT”
Sean Wiegand – PartnerThe way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. The information in this report is based upon our understanding of the Chancellor’s 2024 Autumn Budget, in respect of which specific implementation details may change when the final legislation and supporting documentation are published
Posted by Lambert Chapman
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.