October 22nd 2024.
In just a few short days, Chancellor Rachel Reeves will step up to the podium at the House of Commons to deliver the first Budget for the Labour party in 14 years. As expected, the government has been keeping a tight lid on any potential announcements, as many decisions have yet to be finalized. However, Prime Minister Keir Starmer himself has warned the public to brace for a difficult road ahead, with the upcoming Budget expected to bring some painful changes.
With limited information available, speculation has been running wild about who will feel the brunt of these changes. The government has already ruled out certain options, narrowing down the possibilities for what will be revealed on October 30th. But when exactly is the 2024 budget? Well, the details will be unveiled by Rachel Reeves in her speech to the House of Commons on that very day.
Interestingly, in their pre-election manifesto, the Labour party promised to not increase taxes for working people. However, the definition of "working people" and which taxes fall under this category remain unclear. The manifesto does specify that VAT, national insurance, and income tax will not be raised. But what about other taxes, such as capital gains tax and inheritance tax?
Capital gains tax is a major concern for landlords looking to sell their properties. In fact, according to the Telegraph, there has been a rush among middle-class clients of wealth managers to sell off their properties and shares in anticipation of a potential hike in this tax. The government has been testing various options, with suggestions that it could be brought in line with income tax, potentially increasing the higher rate from 20% to 45%. Similarly, the Guardian has reported that the Treasury is considering a range of 33% to 39% for this tax.
Inheritance tax is another hot topic, with many wondering if any changes will be made to this tax on the property, money, and possessions left behind by those who have passed away. Currently, the standard rate for inheritance tax is 40%, but only a small portion of the population actually pays this tax. Will there be any changes in this area?
At a recent Prime Minister's Questions session, Sir Keir Starmer refused to rule out the possibility of increasing national insurance for employers. This caused some confusion, as this was one of the measures that was ruled out in the Labour manifesto. However, it's possible that the party may argue that this only applies to contributions paid by employees. This change could potentially bring in around £8.5 billion for the Treasury by 2027/28, according to HM Revenue and Customs.
One Budget decision that was actually mentioned in the Labour manifesto is the non-dom tax system. The party promised to raise £5.2 billion by closing loopholes in this system, but it may not be as straightforward as it seems. The Office for Budget Responsibility has warned that the government could end up losing more money than it gains, as wealthy foreigners may choose to leave the UK if their tax breaks are taken away.
Another potential source of revenue for the Treasury is the gambling industry. The government is reportedly considering increasing taxes on this sector by up to £3 billion, with the aim of not only raising money but also promoting better health among the population.
Fuel duty has been a hot topic for the past 14 years, with successive Chancellors choosing to freeze it instead of allowing it to rise in line with inflation. This has been a relief for British motorists, but it has also cost the government a significant amount in revenue. The Resolution Foundation estimates that if the forecast 6p rise in fuel duty is cancelled, the Treasury would lose out on £5 billion.
There has also been speculation about potential changes to pension tax relief, with some suggesting that reducing and redistributing these tax breaks could bring in at least £10 billion a year. The Fabian Society has argued that the current system heavily favors high earners and that reform is necessary.
Aside from taxes, there are also questions about whether Chancellor Rachel Reeves may change the fiscal rules that dictate how much the government can borrow for public spending. The Institute for Public Policy Research has recommended targeting "public sector net worth" as a way to unlock an additional £57 billion of headroom.
As the public eagerly awaits the first Budget from the Labour party in over a decade, there are many uncertainties and speculations surrounding what will be announced. But one thing is for sure - it's going to be a bumpy ride.
[This article has been trending online recently and has been generated with AI. Your feed is customized.]
[Generative AI is experimental.]
