Member News
An unprecedented drip-drip deluge of policy hints and background briefings preceded this year’s Autumn’s Budget Statement therefore we were not surprised by the majority of the announcements.
The Statement loudly proclaimed that its aim was to ensure the wealthiest shouldered the majority of the tax burden and some policies were introduced to this effect: from April 2028 an annual High Value Council Tax Surcharge (HVCTS) will be introduced on homes worth £2,000,000 or more. Ultimately, we do not believe that this will generate a large amount of revenue.
However, the majority of the tax burden will be shouldered by ‘ordinary people’ who save, invest in business and own property. Income Tax increases have been made to landlords, savers and investors with the basic, higher and additional rates of Income Tax increased by 2%. Strangely, the increase to the dividend tax rate will be introduced in April 2026 but the savings and property Income Tax increase will not come into effect until April 2027. Is this to give landlords time to sell their properties?
Rachel Reeves has also committed to freezing the Personal Allowances, personal tax and secondary NICs thresholds until 2031. Again many basic rate taxpayers will be brought into the higher rates of tax due to Fiscal Drag.
Whilst the most obvious object of tax policy is to collect revenue, tax breaks are often introduced as a way of encouraging taxpayers to adopt certain behaviours. It is a shame to see that after many years of encouraging taxpayers to invest in electric cars and save into the pensions via tax breaks (e.g. low BIK and salary sacrifice), these savings are due to be clawed back through Excise Duty and restrictions to the Salary Sacrifice scheme.
It will be interesting to see how the £2,000 a year restriction to Salary Sacrifice schemes may be administered in practice, although businesses have until 2029 to plan for this change.
There was a small mention of EMI and EIS schemes which brings these tax reliefs within the framework of larger businesses (I note EMI company options will increase from £3 million to £6 million) which is good news for business.
Since the previous Budget Statement, one of the key talking points for our clients has been the planned restrictions to Agricultural Property Relief (APR) and Business Property Relief (BPR), it is encouraging to see that a relaxation may be made to these rules may be made for transfers to spouses, however, we are yet to see the white paper in relation to this.
Despite Labour’s stated aim to ensure ‘the broadest shoulders’ carry the greatest burden, pensioners, savers, investors and landlords will be subject to increased taxes.
