The Chancellor delivered a press conference on Monday the 29th of July where she announced this year’s autumn budget will take place on 30 October.
Snapshot Summary
On July 29, Chancellor Rachel Reeves announced that the autumn budget on October 30 will involve tough decisions on spending, welfare, and tax to address a £22 billion overspend. She confirmed no increases to national insurance, VAT, or income tax but there is widespread speculation of possible rises in capital gains, inheritance, stamp duty, fuel, council, and business taxes, as well as reduced pension tax relief. VAT on private school fees will start from January 1, 2025. The Chancellor emphasized long-term economic stability and support for business, noting a £5.5 billion annual reduction in public finance pressure. Tax hikes are expected in the autumn budget.
The Chancellor announced it will involve “difficult decisions on spending, welfare and tax” in order to “protect the foundation of our economy”. The Chancellor has established a new office which will set out to address what has been described as a “black hole” in the UK’s public finances and outlined that the Labour government has inherited a projected overspend of £22 billion this year alone, which she must now mitigate.
The Chancellor confirmed during the speech that she would keep to the Labour pledge not to increase national insurance, VAT, or income tax, which reaffirmed Labour’s commitment to not raising the taxes for working people. However, there is wide speculation that capital gains tax (CGT), inheritance tax (IHT), stamp duty, fuel duty, and possibly council tax and business rates could be on the agenda for the Autumn Budget. Another key area could be reducing tax relief for pension contributions.
The Chancellor reiterated her pledge to restore economic stability through difficult but necessary decisions. It was emphasised that her administration is going to be focusing on long-term economic health, with a stable government supporting business and investment.
VAT on private school fees:
The government also published a technical note regarding VAT on school fees, answering some of the questions many people had. They confirmed that VAT on private school fees and boarding will apply from the 1st of January 2025 and that this will apply to the pre-payment of fees. An anti-forestalling measure is in place meaning that any fees relating to the term starting on or after 1st January 2025 will be subject to VAT from 29th July 2024.
Due to the impact of applying 20% VAT to private school fees across the UK, business owners will be seeking ways to tax-efficiently extract further cash from their business to support paying for school fees, along with other family and life needs. If you would like to find out more about how we could help you extract profit from your business tax efficiently to support the rising cost of school fees, please click here.
The Chancellor has said she has already reduced the pressure on the public finances by £5.5bn a year and over £8bn next year. It is extremely likely that tax rises will be announced in the Autumn Budget on the 30th of October.
Are you concerned about how the Autumn Budget could affect your business? There are various areas where you could potentially be at risk from the tax changes in the upcoming Autumn Budget. We can assist with mitigating the impact of this. Fill out our questionnaire to see which areas we recommend you look at ahead of the 30th of October:
Oldfield will keep you informed as any tax and other relevant policy announcements arise. If you have any questions as to how this may affect your business in the meantime, please don’t hesitate to get in contact with us via info@oldfieldadvisory.com or call 02476673160 and we will be happy to help.
Please note: This article is provided for information only and was correct as at time of writing (01/08/24). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.
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