It would have been almost impossible to miss the fact that the Government has announced sweeping changes to the UK tax landscape. These changes are going to have a significant impact for LBMW’s clients, from private individuals’ own personal estate planning, real estate investors and developers, charities, and trustees of private or charitable trusts. The changes will affect those who are UK tax resident, or who may have been or wish to become UK tax resident.
The proposals are complex and a wealth of detail has been published already on how these new rules will work, but we wanted to flag a few key points which may be of particular relevance to our clients.
Many of our clients may be concerned about the reduction to the reliefs from Inheritance Tax known as Business Property Relief and Agricultural Property Relief. These changes, though long-rumoured, are likely to have a very significant impact on family businesses, and farming families in particular. Many individuals will be concerned about their pensions, which they may have planned to pass on to their families or children free from Inheritance Tax. Individuals or trustees may now need to seek advice on how to prepare for the proposed increase in the application of Inheritance Tax to their estates.
Companies and employers face the double cost burden of the increase to National Minimum Wages and the increase of Employer NICs with effect from April 2025. Family businesses may, therefore, be particularly concerned about the triple hit of increased operating costs and reduced protection from Inheritance Tax.
Anyone considering a sale or purchase of residential property are likely to be affected by the changes to SDLT rates. These changes will not just affect buy-to-let and second home owners and landlords, but any individual who may be part of a “chain” who may find that one or more parties to the chain are no longer able to proceed.
Charities may be concerned about an impact on their revenue as donations might decrease as household disposable incomes may decrease in the next few years. They may also be concerned about the proposals that new legislation be implemented to reduce “abuse” of charity tax reliefs. It would be interesting to see what evidence there is of abuse of the existing rules, which are already well regulated by both HMRC and the Charity Commission. Charities have faced a significant increase in their regulatory obligations in the past few years, so further restrictions are unlikely to be popular with Charities and trustees who are already volunteers working within a very tight regulatory environment.
If you have any questions about how the budget may affect you, please call or email your regular contact at LBMW.