How will Rachel Reeves change UK taxation?

How will Rachel Reeves change UK taxation?

At some point between now and the end of 2024, Rachel Reeves will step up to the despatch box and deliver her first Autumn Statement. As tax changes announced will likely have the Office for Budget Responsibility oversight, changes announced will form the basis of the 2025 Finance Bill.

And some of her commentary will be the subject of consultation with interested parties rather than immediate integration into the UK tax code.

 

Manifesto pledges

The new government has declared its intention to action three tax related changes:

  • Ending some of the tax privileges of private schools, primarily exemption from VAT and non-payment of business rates.
  • Tightening the rules that govern the tax status of non-domiciled individuals, and
  • Introducing an increased windfall tax on energy companies.

 

Funding economic growth

As the new government seems committed to achieving economic growth, and therefore higher tax revenues, how will it fund the initial changes required to accomplish this?

 

Although the Labour Party manifesto made it clear that they would not increase income tax, National Insurance or VAT, there are a raft of other taxes that could be tweaked. For example:

  • Capital Gains Tax rates could be increased such that gains were taxed at the same rates as income. This would simplify an overly complex tax and be fairly easy to impose.
  • Inheritance tax rates could be increased, although press speculation recently has focussed on trimming IHT reliefs such as lifetime gifts, business and agricultural land reliefs.
  • Dividends are still taxed at rates slightly lower than other income sources. These lower dividend rates could be scrapped, and dividends taxed at income tax rates.
  • Stamp Duty Land Tax could be increased especially for non-domiciled individuals.

 

Tax Planning

It is highly likely that any significant tax changes will have an impact on our recommended tax planning strategies. As and when these tax changes are declared, we will notify you of the relevant detail and flag how these changes will have an impact on present tax strategies.