Autumn Statement
Breaking down the budget to reveal what’s really happening behind all those headlines
Labour’s first budget since 2010 – delivered on October 30 by Chancellor Rachel Reeves – announced tax rises worth £40billion to fund the NHS and other public services. But what’s the reality? How does it impact you? We asked some of our Tunbridge Wells Business Magazine experts from across the various sectors to share their thoughts…
THE EMPLOYMENT MARKET:
Sophie Forrest-Lavery of The Forrest Group
‘Financial planning sessions may remind workers of value of staying long-term’
“From April 2025, employers NI will increase by 1.2% to 15%, alongside a threshold reduction from £9,100 to £5,000, so employers could face higher contributions. For business owners, this could mean you will need to review salary structures and potentially prepare for additional employment costs. To ease the strain of this for smaller businesses, the employment allowance will rise from £5,000 to £10,500 per year.
From April 2025, the National Living Wage will increase by 6.7%, reaching £12.21 per hour. This translates to an additional £1,400 annually for a full-time employee. This change is set to boost employee morale and retention, but it may also mean adjusting your payroll budget, particularly if you have a large number of workers in this pay bracket.
The removal of Inheritance Tax (IHT) protection on pensions may shift how employees approach their retirement plans, potentially impacting your retention strategies for older workers. It is advisable to consider financial planning sessions as a way to remind workers of the value of staying in the business long-term.
The extension of government-funded nursery care to children as young as nine months is a significant benefit for working parents. Employers could align their workplace policies to support this by extending parental leave and flexible work options. This benefit will help to reduce employee stress and encourage employee loyalty.”
THE RECRUITMENT SECTOR:
Neil Simmons
of TN Recruits
‘Employers will need to pay a salary of at least £23,809.50 to employees over age of 23’
“At TN Recruits, we are committed to helping our clients navigate the evolving recruitment landscape shaped by the autumn statement.
Public sector training initiatives, with increased funding for education, healthcare, and skills development, create significant hiring opportunities. Our expertise positions us to be a vital partner in sourcing talent for essential public sector roles, helping bridge workforce gaps and strengthen community-focused industries.
The reduction in welfare spending, aimed at reintroducing long-term benefit recipients to the workforce, broadens the talent pool. We see this as an opportunity to match skilled candidates with fulfilling employment, driving both personal and professional growth.
Green initiatives and sustainability investments bring an expanded need for skilled professionals in renewable energy and sustainable practices. TN Recruits is committed to supporting the green transition by connecting clients with top talent dedicated to environmental impact and innovation.
Finally, with the National Living Wage increasing from £11.44 to £12.21 per hour, companies will be advised to ensure their salaries are legal. Based on a 37.5-hour week, employers will need to pay a salary of at least £23,809.50 to employees over the age of 23.”
THE FINANCE WORLD:
Kieron Launder
of CEO Growthdeck
‘Capital Gains Tax increases were less than had been feared’
“The budget was good for Enterprise Investment Scheme (EIS) investors but more mixed for EIS entrepreneurs. The recognition of the economic value of the EIS scheme ensured that the continuation of the scheme was re-affirmed to 2035 along with all the important tax breaks ensuring that EISs for investors remain one of the very few investments where post tax returns are greater than pre-tax returns. Many of our clients have intimated they will be doing more EIS investments especially as Pensions cannot be transferred to future generations tax free anymore (now attracting the full 40% IHT rate, above thresholds).
Wealth creator (employers) and inter generational wealth transfers were the big targets: while the much heralded Capital Gains Tax increases were less than had been feared significant changes were made to the IHT catchment with Transferable Pensions, Agricultural Property and Business Property falling inside estates albeit with tax rate discounts above a combined threshold for the latter two.
With the ultimate goal of investing and maintaining wealth focused on net (post tax) returns and real (not nominal) growth there are fewer and fewer places to invest for the longer term. Private equity investment have implementation complexity but significant IHT tax advantages over public equity, especially with the removal of pension wrapped exemptions, while EIS eligible private equity investments have the huge advantage of being one of the very few investments where the post tax investment returns are greater than the pre-tax returns. EIS eligible private equity investments should receive far greater consideration in this new post Election anti-wealth Labour landscape.”
THE PROPERTY MARKET:
Deborah Richards of Maddisons Residential
‘Buyers and sellers given room to plan with some predicatability – it could have been much worse’
“This latest budget appears to have done little to move the dial in property, and the jury will be out for a few years to see if the new government will be able to make good on its promise of planning reforms and its new homes building programme, and how the harsh measure of the increased stamp duty on second homes, now sitting at 5%, combined with their continued scrutiny on Capital Gains Tax, will affect the appetite of landlords to enter or leave the private rental sector.
The biggest impact of the latest budget will have been to remove much of the uncertainty of the past few months for many would-be movers who have been hanging on to see what might happen. The budget has given buyers and sellers room to plan with some predictability. As budgets go, it could have been much worse for the property market.”
www.maddisonsresidential.co.uk
HOUSING AND DEVELOPMENT:
Rupert Farrant of Durlings Chartered Surveyors & Property Consultants
‘Time is limited if you are thinking of selling and want to reduce CGT liability’
“I’ll start with the positives. The Chancellor has confirmed that the existing 40% relief on business rates for retail, hospitality and leisure industries will continue until 2025/2026 up to a cap of £110,000 per business. However, outside of these industry sectors landlords may need to absorb these costs, certainly for vacant premises or otherwise to stay competitive in a market where tenants are increasingly focused on affordability and flexibility.
Changes made to Capital Gains Tax (CGT) during the Autumn Budget 2024 include an increase in the lower and higher CGT rates to 18% and 24% respectively, whilst the adaptations made to CGT rates and reliefs, alongside other taxes have not been as great as some feared there is no delay in the impact of the new rates which take place immediately.
An increase in Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) 14% from April 2025 and to 18% comes in to effect from April 2026, so If you are thinking of selling and wish to reduce your CGT liability, time is limited.”
INVESTMENTS:
Gary Jeffries of Panaromic Wealth
‘Pension IHT mitigation suggestions include giving away lumps sums or additional income’
“Labour’s first Budget since March 2010 had speculation surrounding potential dramatic changes. Many actioned plans following media rumours taking their tax-free cash, whilst others sold or gifted assets to mitigate Capital Gains (CGT). Lump sums survived but CGT increased.
Rachel Reeves’ headlines were increasing National Insurance, Capital Gains and Inheritance Tax. Depending upon personal circumstances some of the Budget’s effects will be minimal, but for others they will be significant.
Employers National Insurance affects mainly larger employers. From April it rises to 15% (an increase 1.2%). Reduction Secondary Threshold will cost an extra £615 per employee. Increased allowances.
Capital Gains Tax was increased lower than anticipated but rose immediately by 10% to 18% (basic rate taxpayers) and 20% to 24% (Higher Rate). Discretionary and interest in possession trusts increased to 24% with no allowance for inflation.
First £1.0m for business owners Business Assets Disposal relief (BADR) increased from 10% to 14% 2025/26, 18% 2026/27. That means an extra £40,000 and £80,000 respectively. For investments, you could possibly use Investments Bonds.
Regarding inheritance tax, pensions funds since 2015 outside the Estate but from April 2027 inside. (Consultation planned). Changes for some tax at 67% and others 105% additional tax. Changes particularly affect unmarried couples. A possible couple of pension IHT mitigation suggestions include gifting away lump sums and/or additional income. You could also nominate a charity as a beneficiary.
From April 2026 the relief on AIM shares/portfolios will be only 50%. Unlimited Business and agricultural relief restricted now £1 million combined only 50% relief above (so effectively taxed at 20%). – This will be significant for farmers as it impacts partnerships and limited companies on death succession.”
THE LEGAL PERSPECTIVE:
Sarah Strong, Partner, Private Client, CooperBurnett LLP
‘Concept of ‘domicile’ no longer used to determine liability of estate to IHT’
“On 30th October 2024, Chancellor of the Exchequer, Rachel Reeves, delivered her first Budget bringing in several tax changes, including the following changes to Inheritance Tax.
The Inheritance Tax thresholds, the Nil Rate Band (of £325,000) and the Residence Nil Rate Band (of £175,000 for those leaving a home to direct descendants) were already frozen until 2028. This has been extended for a further two years until 2030.
Business Property Relief and Agricultural Property Relief will be reformed from 6th April 2026. There will be relief from Inheritance Tax at 100% on the first £1 million of combined assets, and 50% relief thereafter.
From 6th April 2027, unspent pension funds (including any death benefits payable from a pension) will be included in a person’s estate when calculating their Inheritance Tax liability. However, it is worth noting that this is subject to consultation.
The concept of ‘domicile’ will no longer be used to determine if an estate will be liable to Inheritance Tax. Instead, this will be replaced from the 6 April 2025 with the concept of ‘long term resident’ which has been defined as an individual who has been UK resident in 10 of the last 20 tax years. An individual who has been non-UK resident for 10 consecutive tax years will not be treated as a long-term resident. There will be a reducing period of exposure depending on how long an individual has been resident in the UK before leaving.”
Thackray Williams’ Nick Gabay, Partner in the Corporate & Commercial team
‘Working people likely to feel impact indirectly through higher prices and less generous salary increases’
“The increase in Employer’s National Insurance Contributions will grab the headlines and could damage the government’s relationship with businesses. Even though the government said it would not increase taxes on working people, it is working people who are likely to feel the impact indirectly through higher prices and less generous salary increases as businesses seek to pass on the additional tax burden.
The changes to the Capital Gains Tax (CGT) regime weren’t as punishing as many feared, with the main rate of CGT increasing from 20% to ‘only’ 24% (when some rumours swirled around a much higher increase).
The CGT rate for lifetime gains on disposals of business assets of up to £1m from 10% to 14% next year and 18% the following year will hit entrepreneurs, and many will argue it disincentivises new start-up businesses. But it still offers an advantageous rate compared to the disposal of non-business assets, so the Chancellor probably thinks she has struck the right balance.”
THE RENTAL SECTOR:
Becky Moran of TN Lettings
‘Purchasing buy-to-let through a limited company means stamp duty remains at 3%’
The UK’s Autumn Budget has introduced some changes that will impact landlords and the broader property market in general. The good news is these were probably less draconian than many current landlords had predicted. That said, the importance to understand the adjustments coming into play and how they might influence the rental market, specifically for landlords and those investing in buy-to-let cannot be taken lightly.
One of the biggest impacts to future buy-to-let purchasers in the Autumn budget is the 2% increase on stamp duty on second homes and buy-to-let properties taking the rate to 5%. The higher rate will now apply to additional properties purchased for rental or as second homes, which means that landlords who are investing in new rental properties will have higher upfront costs and need to look into the impact this makes to the financial feasibility of the purchase.
However, there is an alternative that might work for some landlords. Purchasing buy-to-let properties through a limited company means that the stamp duty stays at the usual 3%, which allows landlords to avoid extra surcharges that are applied when buying privately but also allows them still to offset the mortgage interest against the income lowering the income tax payments. This is a benefit that private landlords can no longer claim to offset their tax liability.
No change to the property capital gains tax has allowed these landlords to rethink and re-introduce these properties to the rental market.”
ESTATE PLANNING:
Amanda Redman Financial Planning
‘When it comes to estate planning there was little joy in the budget’
“When it comes to estate planning, there was little joy in the budget. The freezing of Inheritance Tax (IHT) thresholds until 2030 is a hollow consolation in that they haven’t been lowered, but it will result in more estates being subject to the tax due to fiscal drag (the impact of inflation reducing the real value of the tax thresholds).
The most notable change, however, is the inclusion of pensions in IHT from April 2027. This will require a substantial amount of pension planning over the next few years – if not a complete U-turn on a client’s income strategy through retirement – making it vital for people to seek financial advice. Pension assets are now much more likely to be used before Individual Savings Accounts and Unit Trust investments, which hasn’t been the case for the last 10 years when the reverse was true.
This is a real body blow to people who have worked hard throughout their lives to build substantial pension investments. However, with the right financial advice, there are always options.”
The Finance Hub shares insights from three of its expert partners on the impact of the budget
‘Navigating the Post-Budget Landscape with Lifetime Trust Planning’
The recent Budget marks a turning point for estate planning, with significant changes that demand attention from families and their advisers. Among the most impactful is the removal of Inheritance Tax (IHT) relief on pensions, a move that will reshape many families’ financial strategies. Coupled with frozen tax thresholds, the number of households paying IHT is expected to more than double by 2030.
These changes emphasise the importance of lifetime trust planning. Trusts offer a reliable way to protect assets from rising IHT liabilities, but also ensure wealth is preserved for future generations. In this tightening fiscal environment, professional guidance in estate planning is more critical than ever to safeguard family legacies.
Martyn Bates of Alexander Bates Campbell
‘The jury is out – for now’
We knew additional tax revenues had to come from somewhere, but businesses will be feeling the full weight of last month’s budget.
An extra £615pa per employee and 1.2% on the wage bill, in addition to a 7% rise in the minimum wage will be giving owners plenty to consider. One can only think prices will have to rise, risking: inflation, no reduction in interest rates and suppressed business growth.
For individuals, a CGT hike was inevitable, less obvious, including pensions within an estate from April 27. That along with a 50% reduction of the AIM share benefit will focus the mind of those fearing that their family will pay too much IHT. Estate planning strategy will need to be changed.
Will the extra public expenditure promised counteract the above? The jury is out – for now!!
Lisa Sneddon of Twelve 94 Property Finance
‘Budget Blues for Borrowers’
Mortgage rate expectations have shifted after the budget, marking the end of anticipated cuts, and signalling a “higher for longer” trend. The Chancellor’s expansionary plans, which would require increased borrowing, would add inflationary pressure, prompting the financial markets to expect a slower decrease in the Base Rate.
In its appraisal of the budget measures, The Office for Budget Responsibility (OBR) forecasts Base Rates to be over 0.5% higher by the end of 2025, with mortgage rates averaging 0.3% higher than previously predicted. At the time of going to press attention turned to the Monetary Policy Committee’s announcement on regarding rates. If they remain unchanged, mortgage rates may rise. As of November 4th, short-term fixed-rate mortgages are 0.5% to 0.10% pricier, while longer-term fixed rates have increased by 0.15% to 0.20%.
Those wanting a quick return to lower mortgage rates will be disappointed. The trajectory is still downwards, but it will take us longer to get there…
