UK Budget 2024: What's Coming on October 30th?

The UK’s October 30th budget announcement is coming up. Chancellor Exchequer Rachel Reeves is going to deliver the budget. It could bring changes affecting everyone, from taxpayers to big businesses. 

This year, the government focuses on areas that could help balance the economy, support essential services, and keep up with rising costs. Here’s a clear look at what might be on the agenda and how it could impact everyday lives.

1. Capital Gains Tax (CGT) Increases

Capital Gains Tax (CGT) is what you pay when you make a profit from selling assets like stocks, real estate, or cryptocurrencies. 

For example, if you bought some assets a few years back and now sell them at a higher price, the difference is considered a capital gain. With potential increases in CGT rates, this gain could lead to a higher tax bill, particularly for those with major investments. 

This move is likely aimed at generating more revenue for the government to fund public services, like healthcare and education. It could also bring CGT rates closer to the rates applied to regular income tax.

2. Adjustments to Income Tax Rates and Thresholds

The government is also expected to review income tax, which directly impacts how much of your salary you actually take home. 

They may change the thresholds, meaning the income levels at which you pay certain tax rates, so that some people could pay more or less depending on their income. 

Lowering the threshold for higher tax rates could mean more people start paying those higher rates, which helps the government generate revenue. However, they may look to balance this change by keeping lower earners from facing a too big increase.

3. Corporate Tax to Encourage Business Investment

Corporate tax rates have been under much scrutiny as the government tries to find a sweet spot that encourages businesses to invest while supporting public revenue. 

This year, there could be incentives like tax breaks for companies investing in research and development (R&D). 

For example, a tech company developing new software might get tax relief on their R&D costs. These measures aim to support economic growth, job creation, and innovation within the UK.

4. Public Spending on Important Services

Healthcare, education, and other public services are key to any budget. 

After a challenging period for many sectors, there’s pressure on the government to provide additional funding to ease the strain on these essential services. 

The budget may allocate extra funds to the National Health Service (NHS) to reduce wait times or to schools to support improved education quality. 

However, the government must balance this with other priorities and manage public spending effectively.

5. Support for Rising Energy Costs

With energy prices impacting households and businesses, the government might announce measures to help manage these costs. 

Last year, households received some financial relief to help pay for heating and electricity, and businesses were also offered support. 

This budget could extend such support, particularly for low-income households and small businesses feeling the pinch. The government might include subsidies, energy price caps, or direct payments to keep energy affordable.

6. Strategies for Economic Growth Amid Inflation

The budget should also outline ways to stimulate economic growth without adding to inflation. 

Possible initiatives include infrastructure projects to create jobs or support small businesses through tax relief. 

The government aims to balance helping the economy grow and preventing inflation from spiking further. It would increase the cost of goods and services for everyone.

7. VAT on Private School Fees

From January 2025, private school fees may include a 20% VAT (Value Added Tax). However, there’s an exception for students with special educational needs, meaning parents of these students won’t have to pay this added tax. 

The goal is likely to increase government revenue, which could support public education and other services.

8. Abolition of Furnished Holiday Let (FHL) Tax Rules

Starting April 2025, tax rules that benefit those renting out furnished holiday properties will be removed. These rules allow owners to enjoy certain tax breaks, but the government plans to phase these out. 

Transitional measures will be in place, allowing some benefits to continue for a limited time and helping owners adjust to the new system.

9. Taxation of Non-UK Domiciled Individuals

As of April 2025, inheritance tax rules will change for individuals who live in the UK for 10 years or more. 

Instead of being taxed based on where they were born or their “domicile,” they’ll be taxed based on where they live. This change could increase the tax responsibilities for long-term residents from abroad. It aligns them more closely with UK residents.

10. Changes to Carried Interest Taxation

Fund managers, who currently earn an income called “carried interest,” may soon face different tax rates. 

Carried interest often benefits from lower tax rates, but adjustments will bring this rate closer to standard income taxes. This change will make taxation fairer, so fund managers are taxed more like other workers.

11. Energy Profits Levy Adjustments

An Energy Profits Levy, which taxes the profits of energy companies, will increase to 38% starting November 2024 and will remain until 2030. The government is reducing some allowances that previously let companies deduct specific expenses. 

This levy is intended to ensure that energy companies contribute more to government revenue, especially as they continue to profit in a high-price environment.

A Word from Crypto Accountants!

The upcoming budget could bring impactful changes to taxes, public service funding, and support in areas like energy costs. One area to watch closely is Capital Gains Tax (CGT) on crypto, which might rise to 30% or even 35%. This increase would significantly affect investors, especially those with large crypto portfolios.

Just a heads-up: the October 30th announcement is expected to introduce major shifts, so let’s stay tuned to see how these potential changes could shape the UK's financial landscape! For more insights, keep in touch with Crypto Accountants.

For more information, keep in touch with the Crypto Accountants!