Autumn Budget 2024 predictions: what changes are being speculated? 

Ahead of the first Budget by the new government on 30 October 2024, there’s much speculation about what changes chancellor Rachel Reeves could make to help fill the much-reported £22 billion financial ‘black hole.’ 

After prime minister Sir Keir Starmer warned that those “with the broadest shoulders should bear the heaviest burden,” media speculation has focused on potential tax rises. 

However, some areas have been ruled out. During the General Election campaign earlier this year, the Labour Party said it wouldn’t increase income tax, national insurance, or VAT. Most expect them to honour this commitment.  

Before we explore the speculated changes in the Autumn Budget, it’s worth stressing that these are only rumoured, so there’s no guarantee these will happen in their proposed form. 

And whether it relates to investments, pensions, taxes, or estate planning, you should get expert financial advice when making any changes to your finances. 

What is the Autumn Budget? 

While the Spring Budget is the main annual fiscal event with big tax and spending changes, the Autumn Budget is slightly different. 

It looks at the state of the economy and announces spending decisions. As the Labour Party recently won the General Election in July, it’s a more significant event this year.  

The Autumn Budget usually happens in October or November, with questions permitted from the shadow chancellor and MPs. The chancellor also addresses the Office for Budget Responsibility’s (OBR) economic and fiscal outlook, which is released on the same day. 

What are the proposed changes in the Autumn Budget? 

We’ll now explore some of the speculated changes. 

Pensions 

There have been many rumoured changes around pensions; here is a recap of some of the biggest speculated changes: 

Tax relief for higher earners 

Some outlets have suggested a reduction in pension tax relief for higher earners could be possible. This has been deemed unlikely due to the impact on public sector workers. 

Cut to tax-free cash withdrawals 

It’s also been speculated that the maximum tax-free cash people can withdraw from their pensions could be cut. 

Those over 55 can currently access 25% of their pension pot tax-free, up to the limit of £268,275. It is rumoured this could fall to £100,000, or the tax-free amount could be cut to 20%. 

These potential changes have shaken savers who have withdrawn cash from pension pots, according to AJ Bell and Quilter.  

This is concerning as unplanned pension withdrawals could mean some people risk running out of money sooner in retirement or having to keep funds in a savings account with a low interest rate – instead of potentially allowing their money to grow more in their pensions.  

Inheritance tax on pensions 

While you don’t pay inheritance tax (IHT) on pensions, it’s been speculated this may change. This could be a huge change for retirement planning as many people tend to access their pensions last.  

If you’re concerned about any potential changes to pensions, getting financial advice is recommended.  

Unbiased can quickly match you with a qualified financial adviser who can recommend the best course of action based on your circumstances.

Capital gains tax 

There has been speculation that capital gains tax (CGT) rates could be raised in line with income tax. It’s been suggested that any hikes won’t be as high as 39%, which is nearly the rate of income tax for higher-rate taxpayers. 

You pay CGT on the profit of an asset, such as shares and property, when you sell it. While you have an annual CGT allowance, this has been cut from a high of £12,300 in the 2020 tax year to £3,000 for the 2024/25 tax year. 

If you exceed your CGT allowance, you’ll pay CGT at a rate of 10% or 18% on residential property (excluding your main home), shares and carried interest if you’re a basic-rate taxpayer. 

If you’re a higher or additional rate taxpayer, you’ll pay CGT at 20% on your assets, including shares, and 24% for property or 28% on carried interest. 

A key reason CGT rates are attractive for many people is that they are lower than income tax, which is 20%, 40% and 45% for basic, higher and additional rate taxpayers, respectively.  

It’s currently not confirmed how much CGT rates may rise.  

Carried interest ‘loophole’ may be removed 

There’s also some speculation the carried interest ‘loophole’ may be removed. This loophole allows some private equity fund managers to get some of their income taxed under CGT instead of income tax, so they pay less. 

Closing this loophole could raise £565 million a year by the tax year 2028/29, according to the Resolution Foundation.  

Inheritance tax 

Inheritance tax has previously been proposed as an area for reform in previous Budgets, so speculation around this shouldn’t be surprising. 

There are many ways that IHT could change. 

This could include reducing the ‘nil rate band,’ the amount you can pass onto loved ones tax-free or changing gifting allowances and exemptions so you can gift less to reduce the size of your estate.  

Alternatively, the IHT rate of 40% could be increased. 

When you die, you have a ‘nil rate band’ of £325,000, which means you can pass on assets up to this amount without paying any IHT at 40%. You can pass on more assets, including property, tax-free if you pass yours on to your spouse or certain relatives. 

This means that some couples currently can pass on up to £1 million worth of assets to any children or grandchildren, free from IHT. 

Any reduction to the ‘nil rate band’ would mean you can pass less of your assets onto loved ones before incurring an IHT bill.  

National insurance for employers 

While any increases in national insurance for workers have been ruled out, the same may not apply to employers. 

There has been speculation that Reeves is planning to announce an increase in national insurance paid by employers, but there’s been no indication of how much the rate could rise. 

Also, it is rumoured that employer national insurance contributions could be applied to pension contributions, which currently isn’t the case. 

Income tax thresholds 

While the Labour Party committed to not increasing income tax during the General Election, a freeze on income tax thresholds is being considered beyond 2028, when this is initially expected to end.  

As wages increase, more people may have to pay income tax, and some may be pushed into higher bands, so they owe more tax, even though income tax rates remain the same.  

Need help with your finances? 

Speculation around the Autumn Budget can be overwhelming, but it’s important not to act rashly. 

Getting expert financial help can ensure you make the right decisions based on your unique circumstances. Unbiased can quickly match you with a qualified financial adviser who can help.