Who will be the biggest winners to emerge from tomorrow’s Autumn Statement?
First off, that’s probably not the right question to be asking.
Prime Minister Keir Starmer and Chancellor Rachel Reeves have made no secret that Labour’s first Budget in over 14 years is going to be a tough one.
The good news is that Labour has pledged to keep income tax, VAT and National Insurance Contributions (NICs) untouched.
At face value, that sounds good, but keeping the existing tax bands unchanged also means more of your wages will be taxed thanks to ‘fiscal drag’ (i.e., your wages go up, but the rate you start paying tax doesn’t).
Nonetheless, since taxes at the paycheck level are expected to stay the same, that leaves the likely burden on a range of wealth taxes.
What’s for sure is, as the party seeks to fill what they see as a £22 billion black hole in public finances left behind by the Tory government, there are clearly going to be a few disgruntled members of the voting public.
Perhaps the better question is: Who’s stakes are the highest in this Budget?
Let’s have a look.
- Inheritance tax proposal: Potential removal of exemptions and allowances
- Only about 4% of estates currently meet the IHT threshold of £325,000. However, assets left to spouses or civil partners and specific charitable donations are usually exempt from IHT, but this could change from tomorrow.
- Capital gains tax proposal: Possible rate increase on share sales.
- CGT is paid by individuals, trusts and businesses when they sell assets like property (excluding primary residences), shares, or valuable items at a profit. The 1-2% of taxpayers that typically pay CGT might see their taxes go up.
- Carried interest tax proposal: Change the tax burden from CGT to income tax
- Private equity fund managers currently pay income tax on profits made from investments above a certain ‘hurdle rate’. Switching to income tax will result in a significantly higher tax charge.
- North Sea windfall tax proposal: Raising the energy profits levy from 35% to 38%.
- This will apply to companies like BP, Shell, and other energy firms that extract fossil fuels from this area.
- Pay-per-mile tax proposal: Charging per mile driven, offsetting revenue loss from fuel tax with EV rise.
- All vehicle drivers will be subject to PPM tax if implemented
- Pension tax proposal: Lowering the tax-free withdrawal limit
- Withdrawals above the 25% tax-free allowance are currently subject to income tax. Reducing this will hit pensioners with a greater tax burden
- Banking tax proposal: A higher levy and surcharge on banks, impacting bank profits.
- The UK banking levy and banking surcharge are paid by larger UK-based banks and building societies, including Barclays, HSBC, and Lloyds.
- Non-dom tax rules proposal: There will likely be an end to non-dom tax exemptions
- Non-domiciled UK residents, in which there are fewer than 100,000.
- Stamp duty proposal: Reeves is reportedly set to scrap existing stamp duty exemptions put in place by short-lived Tory Prime Minister Liz Truss.
- More homebuyers are likely to be captured by stamp duty in the future