Not Another Budget Action Plan You Must Act on

OMG – Am I the only person who is so absolutely fed up with every unqualified (and unregulated) journalist telling the public what they must do before the Budget 

Unless you have been on a cruise for the last 3 months then you could hardly have missed that there’s one hot topic making the rounds in the UK press right now.

The “What will Rachel do?” saga. Since the date for the upcoming budget was announced, speculation has been rife about what changes might be in store. But amidst all this chatter, how much do we really know? And should you act on the endless guesses and predictions circulating in the media?

Why Wait and See?

The truth is many articles are filled with conjecture from journalists who don’t have any more insight than the rest of us, and are certainly not qualified in any way to give the advice they seem  to be giving and have done a wonderful job of winding up clients if my conversations with our IFA clients is anything to go by.

There are plenty of rumours swirling about potential tax increases and speculation that Capital Gains Tax could spike to nearly 40%. But reacting to rumours can lead to hasty and misinformed decisions.

Why take advice from those who are simply making educated guesses? It’s best to sit tight, wait for the actual outcome, and then take action once you have the facts. After all, most changes announced in the budget won’t come into effect immediately. For example, adjustments to pension tax relief, tax free cash sums, contribution limits etc. are often complex and require time to be implemented.

Business Asset Disposal Relief: Should You Be Worried?

One of the key concerns circulating among business owners is the possibility of scrapping Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief). But let’s take a step back and think about this.

It was Labour that introduced this relief and later increased it. In contrast, it was a Conservative government that reduced it to its current level.

Given Labour’s recent “Business Partnership for Growth” plan, unveiled on 1st February 2024, it seems unlikely they would turn around and reduce this relief further so soon. After all, you can’t position yourself as the party for business and then undermine business owners just months after an election win, (or can you???)

Our Predictions for the Budget

For what it’s worth, here at Harrison Spence, we’ve got our own thoughts on what might happen in this budget:

• Business Asset Disposal Relief: We think the lifetime allowance could be increased possibly up to £5,000,000.
• Business Asset Disposal Relief Rate: We think a sensible rate of 15% could be applied.
• Corporation Tax: No change here, as Labour has committed to capping the headline rate at 25% for the lifetime of this parliament.
• Capital Gains Tax: We anticipate that Capital Gains Tax on second homes, shares, and other general assets which are currently free of CGT such as Classic Cars or fine Wines could align with the standard income tax rates.

These predictions might be entirely off the mark, but regardless of what unfolds, we suggest you wait until the dust settles before making any major decisions.

In just a week, the actual details will be out, and you’ll be in a better position to plan your next steps.

By waiting for the official announcements, you can build your strategy based on solid facts. The budget may bring changes, but with the right approach, you can adapt and continue to thrive.

Whatever happens, Harrison Spence stands ready to assist you with any action you wish to take.