First reactions to the Autumn Budget – pain with some gain?

It has been a frantic four months as businesses across the country put plans in place to reduce their tax burden ahead of expected tax increases. Many pushed through asset disposals and others have passed significant wealth to the next generation. 

Tax should not wag the tail of the commercial dog but the potential for extreme tax rises led to such “knee -jerk” reactions. All along, the definition of “working people” has been dissected. In this context, we expected an increase in Employer’s National Insurance and a freezing of income tax allowances and bandings.

And so, the new Chancellor delivered her first Budget speech. To raise an eye watering £40bn of additional tax, the Chancellor’s key change was indeed to raise the rate of employer’s national insurance by 1.2% (to 15%) as well as significantly reducing the point at which this is paid to salaries over £5,000. Softening this, small businesses will see an increase in the Employment Allowance to £10,500.

Capital gains tax and inheritance tax were, as expected, next in the firing line. On disposals of property and other assets, the main rate of capital gains tax is aligned at 24% from today. Until April 2025, business owners can still benefit from the 10% rate on disposals up to £1m over their lifetime but the rate increases to 14% in 2025/26 and 18% for disposals in 26/27. Those who could not get sales over the line before today may be pleased provided they can complete before April 2025. Fortunately, an increase in capital gains tax to 40% did not materialise. Those who had contemplated a move away from the UK to reduce tax may yet still stay!