sm124 - Flipbook - Page 7
Autumn Budget
How Chancellor
Rachel Reeves could
increase taxes
Discover what the Autumn Budget could mean for workers and pensioners
The National Institute of Economic and Social Research (NIESR) has
issued a stark warning. If no action is taken, the government is likely to
miss its fiscal rule, which requires that day-to-day spending is covered by tax
receipts of a significant £41.2 billion by 2029/30. To stay on track, Chancellor
Rachel Reeves will need to implement further tax increases.
T
his raises important questions
ARE NATIONAL INSURANCE CHANGES
about the policies being considered
ON RENTAL INCOME COMING?
and who might face the greatest
Beyond Income Tax, landlords may also come
昀椀nancial impact.
under scrutiny. While they already pay Income
Tax on rental pro昀椀ts, this does not include
Income Tax, which starts from £125,140, are
potential options.
Furthermore, Inheritance Tax could also be
amended. The current tax-free allowance of
£325,000 (for 2025/26), unchanged since 2009,
might be reviewed for a possible reduction.
Meanwhile, exemptions could decrease for
agricultural assets or gifts made outside the
seven-year rule, potentially increasing liabilities
for families aiming to pass down wealth. t
COULD FREEZING TAX THRESHOLDS
National Insurance contributions or VAT on
TIGHTEN YOUR FINANCES?
lettings. Reeves could introduce new taxes on
Freezing Income Tax thresholds has become one of
property earnings or change the rules for rental
Do you need to evaluate
your options to help secure
your financial future?
the most e昀昀ective, yet hidden, methods of collecting
income entirely.
Understanding these potential changes
taxes. While Reeves previously stated in the Spring
This could raise tax liabilities for small
Budget that this freeze would end in 2028, she has
landlords and potentially lead to rent increases.
since avoided rea昀케rming that promise.
Renters might then bear the 昀椀nancial burden as
Extending the freeze until 2030 would
landlords attempt to pass on these costs.
exacerbate 昀椀scal drag, a process in which
wage increases push taxpayers into higher tax
you are unsure how these policies might
impact you, please contact us to discuss
your circumstances.
IS THE NATIONAL INSURANCE
brackets without providing a meaningful boost
THRESHOLD SAFE?
to their purchasing power.
Although Labour’s current manifesto commits
not to increase National Insurance rates, both
WILL PENSION TAX PERKS
employee and employer contributions could still
COME UNDER SCRUTINY?
be subtly adjusted.
For decades, pensions have bene昀椀ted from
One option might be to lower the National
generous tax incentives, including relief from
Insurance threshold, which is currently set at
Income Tax and National Insurance to promote
£1,048 per month. A lowered threshold could
saving for retirement. However, these bene昀椀ts
lead to increased payroll expenses for both
may soon be subject to review.
employers and employees.
Reeves could consider limiting the 25% tax-free
is essential for 昀椀nancial preparation. If
lump sum that retirees can withdraw or replacing the
WILL RACHEL REEVES RETHINK VAT,
current system with a 昀氀at rate of tax relief regardless
DIVIDENDS OR WEALTH TAXES?
of an individual’s earnings. Such changes would
Reeves might focus on increasing revenue
have a signi昀椀cant impact on pensioners, particularly
by adjusting existing tax policies instead of
those who rely on lump sums for secure retirements,
introducing new ones. For instance, expanding
as well as workers using salary sacri昀椀ce schemes
VAT to more goods and services currently
for long-term savings.
exempt or increasing the additional rate of
This article does not constitute tax, legal or 昀椀nancial
advice and should not be relied upon as such. Tax
treatment depends on the individual circumstances of
each client and may be subject to change in the future.
For guidance, seek professional advice.
A pension is a long-term investment not normally
accessible until age 55 (57 from april 2028 unless the
plan has a protected pension age). The value of your
investments (and any income from them) can go down
as well as up, which would have an impact on the level
of pension bene昀椀ts available
The Financial Conduct Authority does not regulate
estate planning, tax advice or trusts.
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