As the UK Autumn Budget 2024 approaches, scheduled to be delivered by Labour Chancellor Rachel Reeves on 30th October, there’s growing anticipation and some apprehension about potential tax changes. Keir Starmer’s recent remarks about “short-term pain for long-term good” have certainly sparked discussions about what the future holds for taxpayers.
At Baggette + Co Wealth Management, we understand that these uncertainties can be concerning. Our experienced Independent Financial Advisers (IFAs) in Dorset and Hampshire are here to shed light on the possible changes and help you navigate their potential impact on your financial well-being.
So, let’s explore what’s on the horizon and how you can proactively plan for the future.
Pension Tax Relief: Potential Changes and Implications
Pension tax relief is one area that could see significant changes. There’s speculation that the government might introduce a flat rate of 30% for all contributions. This could impact higher earners who currently benefit from relief at their marginal tax rate.
Another potential change is the introduction of a charge on the typically tax-free cash lump sums that many retirees rely on.
If these changes come to pass, they could significantly alter retirement planning strategies, making it even more important to consult with an independent financial adviser to explore the options available to you.
Inheritance Tax (IHT): A Closer Look
Inheritance Tax is another area where we might see adjustments. The current threshold of £325,000 could be lowered, potentially bringing more estates into the tax net. The tax rate itself could also increase from 40%.
For example, if the threshold is lowered to £250,000 and the tax rate increases to 45%, a family inheriting an estate worth £400,000 would currently pay £28,000 in inheritance tax. If Labour enacts changes to this effect, they could end up paying £67,500.
This would particularly affect investors and property owners, making it more expensive to realise gains from their investments if they breach allowances. Those who might be impacted should review their portfolios with a financial adviser to mitigate any potential tax liabilities.
These potential changes also highlight the importance of proactive estate planning to safeguard your assets for future generations.
Capital Gains Tax: What Might Change?
Capital Gains Tax (CGT) is also under consideration. This tax applies to the profit made from the sale of assets, such as investments or property. The government might reduce the tax-free allowance or increase the tax rate, potentially aligning it with income tax rates.
In essence, if you make a profit on the sale of an asset, you could end up paying a higher percentage of that profit in tax. If you’re an investor or property owner, it’s advisable to review your portfolio with an independent financial adviser to understand how these potential changes could impact you and explore strategies to mitigate any tax liabilities.
Council Tax: A Potential Overhaul
Council Tax is under scrutiny, with many believing the current banding system is out of date. While Labour previously pledged not to change council tax bands, there’s speculation that new taxes could be introduced, particularly targeting second homes.
Although these changes may raise concerns, there’s also optimism that a Council Tax overhaul could lead to a fairer system for all.
Stamp Duty: Possible Increases
Stamp Duty, currently applicable to property purchases over £250,000, or £425,000 for a first-time buyer, could also see increases, especially for second home buyers. These potential changes could significantly impact property investment strategies, particularly for those with multiple properties.
We’ll be keeping a close watch on these developments and are ready to help you understand their specific implications for your situation.
Preparing for the Impact: Stay Informed and Take Action
While the exact tax changes remain to be seen, and none of us have a crystal ball here, it’s clear that proactive planning is crucial.
At Baggette + Co Wealth Management, our experienced IFAs can provide tailored advice to help you best navigate these potential changes and ensure your financial plan remains resilient.
Stay Ahead of the Curve
Looking ahead, we’ll provide more detailed insights once we know the outcome of the Autumn Budget 2024.
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Talk To Our Independent Financial Advisers in Dorset
If you have any concerns about how the upcoming Budget may impact your financial situation, we strongly recommend contacting an experienced and independent financial adviser. Our Independent Financial Advisers in Dorset and Hampshire are ready to assist you with expert advice and strategies tailored to your specific needs.
Contact Oscar Hjalmas, our CEO and Independent Financial Adviser, on 01202 676983 or email advice@baggette.co.uk to arrange a consultation.
Baggette + Co Wealth Management is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate estate planning or tax advice. The above information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested. Tax rules may change, and the value of tax reliefs depends on your individual circumstances.