It's just a few days now until the Government announce their first Budget on 30 October 2024.

Whilst the Government have confirmed their pledge not to increase income tax, VAT or National Insurance, there are potential changes to taxation policies which could have significant impact, particularly in relation to Capital Gains Tax, Agricultural Property Relief, Business Property Relief, and Inheritance Tax.

GFW’s Elliot Taylor and Andrew Entwistle share their thoughts below.

Andrew Entwistle, Partner: 

“In my 30 years working in the rural sector, I cannot recall a budget that potentially so significant for all of our clients. The reason this budget is so significant for the rural economy is due to the potential changes in taxation regimes that would have a strong effect on both market behaviour and the value of assets.

“At the turn of this year it was mooted that Inheritance Tax (IHT) could be removed altogether by the then Conservative government. If this had taken place, the implications of such a move would have suddenly increased the supply of agricultural land, and there is no doubt a major factor in supply and price of land was the fact that agricultural assets could be held as IHT shelters. If there was no need to shelter from IHT then a lot of clients would alter their plans significantly resulting in an increase in supply, which would in turn would affect the market.

“Now we have a Labour government this seems to have moved to the other extreme. If indeed there is going to be an inheritance tax and capital gains raid as is being suggested, it’s not just the changes but the timing of any changes that are important. That will be the key focus for reviewing family strategies and understanding how the market landscape will unfold over the next 12 months.

“If there is any comfort to be had, it is that there has been a trend of putting out rumours on draconian scenarios before such announcements so when the actual day comes, politically it can be said “well, it wasn’t as bad as we expected.

“I also think Whitehall will be well aware of the potential effects on the market in terms of timing and also tax revenue. Given the previous Truss / Kwarteng mini budget formed a large nail in the previous administration’s coffin, I assume that lessons have been learned from this for the upcoming budget.

“I hope the budget will not be drastic and sense prevails. We can but wait and see. And when we do know, we will be on hand to help our clients navigate through to the best available outcome for them.”

Elliot Taylor, Partner:

“As the UK government prepares to announce the autumn budget, speculation is mounting over potential changes to taxation policies. It has been suggested that the Chancellor of the Exchequer, Rachel Reeves, could be considering changes to Capital Gains Tax (CGT), Agricultural Property Relief (APR), Business Property Relief (BPR), and Inheritance Tax (IHT).  While these proposals may aim to boost revenues and address perceived tax inequalities, they could pose significant challenges to the property and land sectors.

“One anticipated change, is raising CGT rates to align more closely with income tax, potentially increasing the top rate from 20% to as much as 45%.  For APR and BPR, which provide significant inheritance tax relief for agricultural and business assets, the criteria may be tightened. Changes could include extending the minimum ownership period or revising the definitions of qualifying assets, potentially resulting in higher IHT liabilities for families transferring farms or businesses.

“These anticipated reforms may push taxpayers to reassess their estate planning, business structures, and investment strategies to adapt to a potentially more demanding tax environment.  These potential changes may have a consequence on longer-term estate planning and investments, reshaping the property and land sectors.

“While the exact nature of Rachel Reeves’ taxation reforms remains uncertain, potential changes to these tax reliefs in the Autumn Budget could present challenges for taxpayers, particularly those with significant assets or agricultural interests.

“For those who may be affected, the budget’s announcements must be considered very carefully.  It is clear that good professional advice will be required to successfully navigate the new tax landscape.”

To discuss the upcoming budget and its potential impact on your business, call Andrew on 07977 518156 or Elliot on 07590 445301 for a confidential discussion.