The Budget will be held on 30th October and it appears that some taxes will be going up. In this newsletter, we update you on the tax rises we already know about (for example, VAT on private school fees), but where else can Rachel Reeves raise revenue? In the election campaign, she promised not to raise the rates of Income Tax, National Insurance, VAT and Corporation Tax.
There are perhaps three main areas she will look at. Inheritance Tax (IHT) is long overdue major reform. (For example, the allowances for lifetime gifts have not risen since the tax was first introduced almost forty years ago.) Such reform could include a reduction in the many reliefs that are available, particularly the 100% relief for qualifying businesses (which currently includes many quoted on the AIM market on the London Stock Exchange). The extra IHT break for leaving a home to a direct descendent, relieving up to £350,000 of value per married couple, was only introduced in 2017. It is immensely complicated in its detail and could conceivably be abolished, perhaps with an increase in the normal nil rate band (which has been frozen for the best part of twenty years) as partial compensation.
