Top 8 Rule Changes Possible in the 2024 Autumn Budget

Labour has repeatedly made it clear that there will be no increases in National Insurance, Income Tax, VAT or Corporation Tax. However, the party has not given the same guarantees for CGT, leading to speculation that it might be increased in the upcoming budget.

Potential changes to CGT might involve aligning it with Income Tax rates or lowering the tax-free allowance. The CGT allowance for 2024/25 is £3,000, half of what it was in 2023/24.

A government looking to raise funds could increase the Inheritance Tax rate, lower the tax-free allowance, eliminate gifting allowances, or remove IHT reliefs. Another possibility is the introduction of a ‘Double Death Tax,’ where Capital Gains Tax is applied to IHT when families inherit assets. Pensions are typically exempt from IHT, but this could also change in the autumn budget.

Before the election, Labour announced that if it came to power, it would bring the first-time buyer exemption threshold back down to £300,000. This threshold was increased to £425,000 in September 2022 and was scheduled to revert in April 2025. Chancellor Rachel Reeves might include this in the budget and announce other changes to stamp duty.

Labour’s commitment to the state pension triple lock was a key part of its manifesto. Reeves reaffirmed this on 29 July in the House of Commons. The triple lock ensures the state pension increases each April based on inflation, average earnings or 2.5%, whichever is the highest.

Speculation about private pensions has been intense in the lead-up to the budget, as changes to pension rules are a common way for chancellors to generate additional revenue. One change reportedly being considered is lowering the maximum amount of tax-free cash savers can withdraw from their pensions starting at age 55. Currently, savers can take 25% of their pension pots tax-free, up to a limit of £268,275. This could be reduced to just £100,000.

Labour has expressed its commitment to tackling tax avoidance and abolishing the non-dom status. The government announced that from 6 April 2025, non-doms will lose their special tax treatment and be subject to a new residence-based system.

However, reports suggest that some plans to abolish non-dom status are being reconsidered due to concerns about revenue.

The government has announced that VAT will be applied to private school fees starting 1 January 2025, potentially raising costs by up to 20%. The government also plans to close a loophole that would have let parents avoid VAT by pre-paying school fees. While the new rules take effect on 1 January of next year, any fees paid in advance from 29 July will still incur VAT.

The income threshold for receiving child benefits is also expected to be increased. An expert said this would be a ‘big boost’ for higher taxpayers.

The new government has not talked about the British Individual Savings Account (ISA), but reports suggest Reeves will officially scrap it in the budget. However, critics argue that it would complicate the ISA system and have minimal economic benefit.