With the Autumn 2024 Budget fast approaching, individuals and families across the UK are preparing for potential changes that could significantly affect their financial, property, and legal plans. The budget, set to be delivered on 30 October 2024, is expected to address a wide range of economic issues. From property taxes and pensions to inheritance tax (IHT) and capital gains tax (CGT), reforms could have a profound impact on wealth management, estate planning, and conveyancing transactions.
At Anthony Gold, our Private Client Services team is closely monitoring the budget to understand how it may influence our clients' interests across various sectors. Whether you are buying or selling property, managing a pension, or planning your estate, it is essential to stay informed and be prepared for any post-budget changes that may affect your financial and legal decisions.
What Key Areas of Change Could Affect Property and Wealth Planning?
1. Property: Possible Stamp Duty Changes
For property buyers and sellers, Stamp Duty Land Tax (SDLT) remains a critical area to watch. There is growing speculation that the budget may reduce the SDLT nil rate band from the current £250,000 to £125,000. This change is due to take effect from 31 March 2025, or sooner, depending on the Chancellor's priorities. If introduced, this reduction would increase the tax burden on homebuyers and may affect decisions to buy or sell property in the coming months.
Property buyers, especially first-time buyers, should stay informed on SDLT changes, as it could influence the overall cost of their purchase. Sellers may also need to adjust their plans, particularly if a higher tax liability deters prospective buyers.
2. Capital Gains Tax: Could Higher Rates and Reduced Reliefs Be on the Horizon?
Several potential changes to Capital Gains Tax (CGT) have been discussed in recent months, and these could feature in the Autumn 2024 Budget. Possible changes to look out for could include some of the following:
- A return to aligning CGT with income tax (IT) rates, potentially increasing CGT up to 45% for higher earners.
- A flat rate for CGT, but higher than the current rates.
- Removal or reduction of the CGT annual allowance, which has already been significantly reduced in recent years.
- Reducing Private Residence Relief, meaning homeowners could face CGT on the sale of their main residence.
- Abolishing hold-over relief when transferring assets into trusts.
- Reducing or removing the CGT uplift on death, which would affect both CGT and inheritance tax, creating additional complexity in estate planning.
These potential changes could prompt individuals to consider disposing of assets before the new rates or rules take effect, particularly if they are contemplating selling second homes, investment properties, or other valuable assets.
3. Inheritance Tax: A Potential Shift in Exemptions and Reliefs
Inheritance Tax (IHT) is another area that could see significant reform. Currently, IHT is charged at 40% on estates valued over £500,000 (where full Nil rate band of £325,000 and Residence Nil Rate Band of £175,000 is available), but the following potential changes could be introduced:
- Abolishing the Residence Nil Rate Band (currently capped at £175,000 until 2028), which could increase the IHT burden on estates.
- Reducing or removing the uplift in value of assets on death, impacting both CGT and IHT. This could lead to what some consider double taxation.
- Reducing or capping Business Property Relief and Agricultural Relief, which currently offer valuable tax benefits to business owners and farmers.
- Removing IHT exemption for residuary pension funds, affecting estate planning for those with substantial pension wealth.
These changes could significantly impact estate planning strategies, and individuals may need to reassess their plans to mitigate potential tax liabilities.
What Pension and Child Benefit Changes Should You Be Aware Of?
1. Pension Reforms: Could the Lifetime Allowance Be Reintroduced?
Pensions have been rumoured to be a key focus in the Autumn 2024 Budget. Some of the potential changes include:
- Reintroducing lifetime allowance on pensions, which was recently removed.
- Limiting the tax-free lump sum (currently 25% of the pension pot), reducing the amount individuals can withdraw from their pension without incurring tax.
- Removing IHT exemption for residuary pension funds, which could have significant implications for those planning to leave their pension wealth to beneficiaries.
If these pension changes are introduced, individuals with pension sharing orders or retirement planning strategies may need to reassess their financial plans to ensure tax efficiency and compliance with new rules.
2. Child Benefit Earnings Threshold: An Increase in Eligibility
There are also discussions surrounding an increase in the child benefit earnings threshold, which could mean more parents are eligible for child benefit. This could provide additional income support for parents, particularly in cases of separation where child benefit is a key consideration in financial arrangements.
Parents currently receiving child benefit should ensure they are up-to-date with these potential changes and consider how this could affect their overall financial planning.
How Could These Changes Impact Your Legal Affairs?
The potential reforms in the Autumn 2024 Budget extend beyond taxation. Here are some other areas where legal advice may be crucial:
- VAT on Private School Fees: From 1 January 2025, VAT will be added to private school fees, affecting parents who are paying under a financial court order. If school fees become unaffordable, it may be necessary to seek a variation of the order or explore alternative schooling options, potentially involving a specific issue order if parents cannot agree.
- Impact on Financial Settlements: With potential changes to IHT, CGT, and SDLT, the timing of financial settlements could be critical. Finalising a settlement before or after certain dates may offer significant tax advantages, and individuals should seek advice on the best course of action depending on the changes introduced.
What Should You Do Next?
The Autumn 2024 Budget may introduce these changes with varying timelines, but many reforms could take effect from the start of the new tax year in April 2025. However, it is not unheard of for some changes to be implemented immediately post-budget, as we saw in June 2010.
- Act quickly where needed: If you're concerned about CGT, SDLT, or IHT changes, it may be beneficial to finalise financial arrangements or dispose of assets before the budget is announced.
- Seek expert advice: At Anthony Gold, our Private Client Services team can help you understand how potential changes might affect your personal circumstances and provide tailored guidance on managing your property, estate, and pension affairs in light of the budget.
Our Private Client department
Our Private Client Services team is highly experienced in conveyancing, family, leasehold, estate planning and tax advice. We provide tailored advice to individuals and businesses, ensuring that you are fully equipped to handle any new legal requirements that may arise from the budget. We can assist with:
- Property transactions and understanding changes to SDLT.
- Capital Gains Tax strategies and asset disposal.
- Estate planning to minimise IHT liabilities.
- Pension planning and advice on the tax implications of future reforms.
- Family law support, particularly where child benefit or school fee payments are affected by court orders.
Conclusion
While the Autumn 2024 Budget introduces some uncertainty, being proactive about your financial and legal affairs can help you navigate these changes smoothly. Whether you're considering a property transaction, reviewing your estate, or managing a pension, our Private Client Services team is ready to provide the expert advice you need.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
