The New Government – Two Months In

Published: September 2024

4 July seems so long ago now.  So, let us have a quick look at what’s happened so far.  At this early stage it is all about the political intent rather than legislation in place.

We saw a strong hand with the government cracking down hard on the rioters and those using social media to incite rioting and racial hatred.

There was an early announcement with the plan to remove the Winter Fuel Allowance from most pensioners with around ten million previously in receipt of this benefit.  The government has already had a rebellion within its own party and resistance from the Trade Union movement.  Despite these protests and backlash, on 10 September it was voted through to remove the Winter Fuel Allowance.

The introduction of VAT on private school fees had already been flagged ahead of Labour winning the election and this is yet to come into effect on 1 January 2025.

The government tells us that they have found a £22 billion hole in the finances caused by the previous government.

Sir Keir Starmer has kicked off with strong messages about the tough times ahead and those with “the broadest shoulders should bear the heavier burden”.  What we don’t know is what is meant by “broadest”.

Rachel Reeves will present her first Budget on 30 October, with rumours abounding as to likely tax rises.  I must be clear there have been no leaks or official statements, so the rumour mill is at full speed.  However, it is worth thinking about just some of the options available to Ms Reeves:

• Reducing tax relief on pension contributions by limiting to 20% relief or possibly a flat rate at 30%.
• Including pension plans in estates where they are not currently normally taxable.
• Changing rules around Pension Commencement Lump Sums better known as Tax-Free Cash.
• Removing or reducing some of the tax breaks around Inheritance Tax, or even introducing a higher rate tier on estates above a certain level – a sort of deferred wealth tax.
• Increasing Capital Gains Tax by increasing rates or removing some of the reductions and exemptions which currently apply.

Although care should be taken around making irreversible decisions ahead of the Budget, it is certainly worth talking to a Chartered Financial Planner to review whether there are steps that you might consider taking prior to 30 October.

If you would like to talk to one of our Chartered Financial Planners, please contact us on 01223 233331 or email info@mmwealth.co.uk.

Contact us

Disclaimer

Opinions constitute our judgment as of this date and are subject to change without warning.  The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment.

The information in this article is not intended as an offer or solicitation to buy or sell securities or any other investment, nor does it constitute a personal recommendation.

The Financial Conduct Authority does not regulate estate planning and tax planning.

The information contained within this blog is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing.  Levels, bases and reliefs from taxation may be subject to change.