By Isle of Wight Observer
The Chancellor, Rachel Reeves, accused the previous government of leaving behind a £22 billion black hole, in public finances, in her speech last month. So it’s likely her first budget, which is set to be delivered in October, will include some significant shifts in tax policy and exemption rates, as the government looks at further methods to raise revenue.
Immediately after being elected, the government sought to conserve funds by scrapping projects like the Stonehenge tunnel, universal winter fuel payments, and NatWest share sale. The Chancellor and the Prime Minister have both warned the public about the budget, saying it will be “painful”. As promised, Labour will not increase the taxes on working people, but what can we expect to see from Labour’s first budget in 14 years.
• Capital Gains Tax (CGT)
The government has claimed repeatedly that National Insurance, Income Tax, and VAT rates will not rise. However, the same cannot be said with CGT. Tax and property experts are anticipating a hike in CGT rates. CGT, for residential property, is currently at 18 per cent to 24 per cent.
• Inheritance Tax (IHT)
Another tax that is likely to increase is IHT. The government could either raise the tax rate or reduce the tax-free threshold, which is also known as the nil-rate band. Currently, the IHT rate is 40 per cent for properties above the nil-rate band, which is £325,000. Alternatively, the government could impose a double death tax. This would mean imposing a CGT on top of the IHT.
Passing on assets to a family member only imposes IHT, but with the double death tax rule, CGT could also be imposed, taking the total tax rate to 54 per cent.
•Stamp Duty Land Tax (SDLT)
The first-time buyer, SDLT exemption threshold was increased from £300,000 to £425,000. But Labour said before the election that this threshold will be cut down to £300,000.
If you would like to speak to a member of the Biscoe’s Residential Property team, please contact us on 01983 533938.