Chancellor Rachel Reeves' inaugural Budget has sent ripples through the financial landscape, marking a significant turning point for UK economic policy ...
Thanks to the budget, many are unsure about passing on their assets to the next generation!
In an effort to address a daunting £22 billion shortfall and revitalise the ailing NHS, she announced measures expected to extract £40 billion from taxpayers and businesses alike. Observers can't help, but wonder, though ...
"Will Labour come back for more tax increases in the future?"
The Budget revealed a delicate balancing act, as Reeves sought to appease both the public sector, which urgently demands resources, and a private sector reeling from potential tax increase shocks. While there was a collective sigh of relief among investors regarding tax reliefs and allowances, the overall implications of the Budget signal a cautious path ahead.
Notably, while Labour forwent taxing pension contributions and slashing tax-free allowance limits, the Budget nevertheless introduced formidable changes, especially targeting employers' National Insurance Contributions, Inheritance Tax and Capital Gains Tax. This means that come April 2026, family-owned business and agricultural assets exceeding £1 million will face a punishing 20% IHT on their value above this threshold.
"This is an alarming shift for many families hoping to pass down their legacies smoothly!"
Moreover, the higher rates set for CGT will dissuade investment, as the hikes, 18% for basic gains and 24% for higher rates, position the UK amongst the high-tax territories in Europe. Investors caught off guard by these rates must now reconsider their strategies, impacting not only personal portfolios, but also overall UK market dynamics.
While Chancellor Reeves has laid down a considerable framework for increased taxes, the uncertainty remains: Will this be sufficient to fund Labour's ambitious plans? With the promise of enhanced public services reliant on productivity gains, it is possible that future Budgets will seek further increases to sustain these objectives.
As we digest the recent announcements, it becomes clear that the financial burden, particularly on private-sector businesses, could escalate unless appropriately managed. Labour's approach to rectifying the nation's finances hinges on public reception, leaving many to ponder whether the Chancellor will indeed return for more adjustments if the desired outcomes are not realised.
"Both individuals and enterprises are left to navigate a newly complex financial landscape!"
The balancing act of fiscal responsibility and investment stimulation continues, leaving many stakeholders watching closely to see if additional tax burdens will emerge on the horizon.
Reeves claims this was a once-in-a-parliament budget. I'm not sure I believe her.
Until next time ...
ROGER EDDOWES Business Godparent
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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