‘Tax rises are coming’ in Autumn Statement as one change could have ‘huge effect’ | Personal Finance | Finance

In the Autumn Statement, financial experts warned people to be prepared for tax increases. Chancellor Rachel Reeves will announce her latest policies on November 26. Paul Barham, head of international private client tax Forvis MazarsHe said tax increases were “almost certain” as the government was determined not to cut public spending.

He warned: “Tax increases are coming and will impact financial planning.” Looking at how the Government could raise tax revenues, he said: “Stealth taxation is more likely than any large-scale overhaul, due to promises made in the manifesto and repeated at the Labor Party conference not to increase VAT, income tax or National Insurance.

“We can expect to see a sustained freeze on income tax thresholds, a subtle but effective way of raising income, as wage inflation pushes more people into higher tax brackets. The government could also close hitherto unnoticed tax benefit schemes, such as non-AIM business relief investment schemes.”

Income tax thresholds and personal allowances are frozen at their current rates until April 2028, but Labor has previously said it will not continue the freeze after that date.

Gerard Boon, managing director Blessing BrokersHe said he believes there could be significant changes to capital gains tax. He said: “Although capital gains tax currently only applies to second homes and properties bought to let, changes proposed by Rachel Reeves could reduce exemptions or bring rates closer to income tax levels.

“From my perspective on the mortgage market, these changes will have a huge impact on the housing market. Landlords and property investors will feel the impact first-hand, and this could ripple into the rental market and wider property prices, affecting ordinary people looking for a home or a safe investment.”

Changes to capital gains tax

Mr Barham also said there could be changes to capital gains tax, such as increasing the exit charge on individual assets. He said: “Designed to prevent people avoiding tax on capital gains by moving abroad, it can be introduced for unrealized gains when an individual or company ceases to be resident in the UK.

“The same is true for trusts and business entities. Given the migration prior to the abolition of the non-Dom regime, not introducing this regime at the same time would appear to be a missed opportunity, but would still have the effect of ensuring that profits created in the UK are taxed here.”

Mr Boon also said the current stamp duty land tax system could be replaced by a new tax, with an annual property tax based on property values.

He said: “Whilst the aim is to provide local authorities with a more predictable income stream, this will certainly and inevitably increase costs for landlords, particularly those with high-value properties.

“In fact, a recent study we conducted highlighted how 75 percent of respondents believe retired and working homeowners would be the most harmed by such a tax, highlighting how deeply it could affect ordinary people.”

The Conservatives set out policy at their party conference to scrap stamp duty on primary homes to make it easier for people to get on the property ladder.

Mr Boon said: “However, it seems almost certain that Labor will be under pressure to repeat this approach and we could see a similar announcement in the Autumn Statement, which will become a ‘Best Trump’ play to help secure Labor re-election.

“For households and investors, these potential tax changes really highlight the need to plan ahead. Taking the time to review your property portfolio, understand potential tax liabilities and seek professional advice can make a big difference in the months ahead.”

Tim Sarson, Head of UK Tax Policy KPMGHe also said that there was a broad consensus that there would be tax increases in the Autumn Statement.

He said: “A re-freezing of income tax thresholds seems almost inevitable, but beyond that there are few easy options. There is some speculation of a rise in the VAT rate or a reduction in the registration threshold. Neither seem highly likely to us.”

“Raising the interest rate at a time when the government is looking to stabilize prices could be inflationary, and lowering the threshold, while quite sensible from a fiscal perspective, risks angering many small businesses.”