As you know, Labour got into power at the general election in July and they have warned us that Rachel Reeves’ budget on 30th October is going to be painful. Yeah!! Who doesn’t want to hear that?!
Labour have said that they are not going to change income tax, national insurance or VAT, but everything else is up for grabs. In my opinion, Labour have some easy things to change to generate more tax money:
- Get rid of the capital gains tax allowance – it is now only £3,000 per tax year per person and so isn’t really there anyway.
- Increase capital gains tax so that it is the same as income tax – at the moment the rates are 10% and 20% (18% and 24% for property) but by increasing them to 20%, 40% and 45% that is a lot more tax money to spend.
- Remove the Residential Nil Rate Band for Inheritance Tax – meaning that everyone’s IHT Allowance is back down to £325,000 rather than £500,000.
These are my assumptions of what could happen on 30th October, but who knows what Rachel Reeves will decide. She may then decide to action her plans straight away – unlikely as it will need work from all of the investment companies and HMRC, or at the start of the new tax year or she could taper them in.
There has also been talk in the media of changing pensions and getting rid of tax free cash, but I have been hearing that for decades and I do not think that this will happen this year.
