What are the Repercussions of The Budget?

What are the Repercussions of The Budget?

A week on from The Budget, businesses, investors, and the market have all had time to adjust to the announced changes and prepare for the road ahead.

At Hansford Bell, we provide quality financial services based on the latest developments and projections. While the broad range of changes affect different people in different ways, in this article we’ll offer insight on how to navigate these changes, and show how they could affect you.

Start preparing your finances today by getting in touch.

What is The Autumn Budget?

On October 30th, 2024, Rachel Reeves – Labour’s Chancellor of the Exchequer – announced the new Budget which governs the UK’s spending for the next 5 years. In this, she outlined a number of key changes to both the principles behind our spending, and to various factors, such as:

  • Tax – rising by £40bn, but not directly through income tax.
  • Pensions – the Triple Lock will continue, but they will count as an asset towards inheritance from 2027.
  • Inheritance – the threshold freeze has been extended from 2028 to 2030.
  • Capital Gains Tax – the lower rate is increasing from 10% to 18% while the higher rate will increase from 20% to 24%.
  • Housing – Stamp Duty has already risen as of October 31st for those buying second homes, from 2% to 5%.

Despite these significant changes, to some The Budget was a sigh of relief. Before it was announced, there had been rumours of caps on the tax-free cash amount you could get from your pension – something which never came to fruition. Additionally, there were concerns of the tax relief on contributing to a pension, which is one of the main justifications for investing into a pension, but these changes also never came into effect.
With that said, there are still changes that could have an impact on your finances, so we’ll explain the key points – and what you can do about them.

Find out more about The Budget >

National Insurance Increases for Business Owners

 

One of the biggest things is the increase in employee National Insurance for business owners, with the threshold lowering to £5,000 and the contribution increasing to 15%.

From a business and employee perspective, this could prompt cutbacks on wages, pay increases, recruitment, and growth, which in turn could see damage to the economy’s growth. There are still things that can be done from an internal business point of view, such as running pension schemes as an incentive to help mitigate corporation tax and improve protection for your shareholders.

At the same time, business owners need to be more vigilant than ever about their personal finances. These changes to National Insurance could see a dip in your profits or personal takeaway, so finding ways to make the most of your money could help maintain your lifestyle and income.

Inheritance Tax Changes 2024

 

The changes to inheritance tax that were announced in the budget have not yet come into effect, with many of the changes expecting to come into play from 2027. This gives you time to prepare your assets before these changes come into effect.

One of the main points to note is the extension of the freeze in inheritance tax brackets, now lasting until 2030 instead of 2028. This freeze means that an effectively greater proportion of your wealth will be taxed should you die.

The historically favourable benefits for agricultural farmers have also taken a hit, with new restrictions around business asset disposal relief and agricultural relief, alongside inheritance tax on agricultural lands above £1 million being introduced. This means more frequent planning and advice may be needed to ensure your assets and property are protected, so it’s important to speak to an advisor to see what can be done.

Get in touch today to review and enhance your financial plans under the new Budget.

How Has The Budget Changed Pensions?

The greatest change for pensions under The Budget is that, from 2027, they will be brought back into an estate when considering inheritance tax. For a long time, pensions have not formed part of the inheritance tax calculation, and this change could have major implications for your end-of-life planning.

Despite these changes, there are still things that can be done to help mitigate the effect of inheritance tax on passing on your wealth. By changing your approach to planning and forming your estate, reviewing your current situation, and looking at alternatives, expert financial planners like Hansford Bell can help you find the path that best suits your financial situation and goals.

This change has also highlighted the importance of continuously and regularly reviewing your savings, protecting you against similar unexpected developments.

Protect your finances with Hansford Bell

What is clear from The Budget is that people need to ensure they’re getting the right advice for their savings. Whether you’re worried about the effect of the National Insurance changes on your finances, or the impact the changes to pensions could have on your inheritance, talking to a financial advisor can help you find the right solution.

At Hansford Bell, we provide a personalised service for financial planning and estate tax planning, helping you to make the most of your wealth and ensure your loved ones remain secure even after you’re gone.

While The Budget has caused changes to the ways wealth can be preserved, our expert Chartered Financial Planners can find the path that works best for your situation. Book your free consultation today!
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Disclaimer: this article is for informational purposes only and does not constitute advice.