All things US election and UK Autumn Budget: Special Edition

What a week it has been we have had, two of the most anticipated events have now concluded. The unknowns that have been looming over us are now known. Rachel Reeves announced her first Labour Autumn Budget in the UK last week. A poignant moment as the first female chancellor for in the history of the United Kingdom.

Just this morning, Donald Trump has reclaimed the White House with what appears to be a significant win over Kamala Harris in the US election.

Early Responses to US Election Result:

Stocks appear to be in the green in the early stages of the Trump election win in the US. The response to markets is arguably predictable as many investors had priced in him being successful this morning. We are seeing traders ramping up bets on fresh tax cuts, tariffs and rising inflation. We have seen strength in the dollar today.

In the weeks leading up to the election, we had seen soaring gold and bitcoin prices as investors flocked to alternative assets, with concerns bubbling about potential trade tensions with Trump back in office.  However, with rising dollar prices we have seen the commodities market come pressure today, coupled with Trump’s promise of tariffs on imported goods especially from China, we have started to see weakening in industry metals, copper and iron prices.

However, we are mindful that there is huge uncertainty surrounding the actual policies President Trump might get behind and therefore the market moves we have seen may reverse. The important factor is to remain focused on your goals and objectives, taking that longer term view with money invested.

Possibility of Interest Rate Cuts both at home and across the pond?

Tomorrow, Thursday 7^th of November, marks the next Bank of England (BOE) interest rate announcement to which having previously been expected to be the first rate cut, following the announcement in September of falling inflation rates (currently 1.7% in the UK). Questions have been raised as to how aggressive the BOE will be in cutting rates in the wake of the UK Autumn budget.

The Federal reserve in the US is set to make its interest rate announcement later this month, and following a similar trend to the UK, experts are suggesting that the Trump win despite the potential of tax cuts stimulating the US economy initially, the prospect of additional tariffs and stricter immigration policies will likely drive inflation up and subsequently slow down the interest rate cut cycle.

Breaking down the UK Autumn Budget:

Despite the widespread changes that were announced during the Autumn Budget last week one could argue that it was a much kinder budget than what we were expecting. With the media and government having braced us for complete doom and gloom, there is a slight feeling of relief that it isn’t as bad as we had all been anticipating. That said, a total of £40billion of additional tax was accumulated by the government through their tax hikes. Which marks the biggest tax raid that the UK has seen in decades.  With Reeves revealing her plans to reestablish economic stability, increasing investment and restoring public services.

Probably the most surprising of the tax increases was the increase to national insurance contributions for employers. This was increased from 13.8% to 15% from April 2025. Now although not a direct hit for ‘working people’ (employees), it has been argued that this will have a direct impact as employers consider freezes on hiring and reduction in salary raises being more likely moving forwards. It has been suggested that this move alone will bring in circa £25billion in additional tax, although some scepticism has been passed as to whether the figure really will be this much. 

There were also measures targeted at individual investors and savers. Most notably the increase in capital gains tax, moving from 10% to 18% for basic rate taxpayers and 20% to 24% for higher rate. This will apply to non-property assets. The British ISA announced in the April by the previous chancellor Jermery Hunt was scrapped. In other key headlines surrounding capital gains tax were as follows:

• Business assets qualifying for Business Asset Disposal Relief (BADR) and Investors’ Relief will increase from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026.
• The Investors’ Relief lifetime limit is reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024.
• From 30 October 2024 changes are being made to the capital gains rules that apply to the liquidation of Limited Liability Partnerships.

Next up, we also saw significant changes to Inheritance Tax (IHT) for the first time in decades. With the nil-rate band of £325,000 and Residence Nil Rate Band at £175,000 (for estates under the value of £2,000,000) were frozen until 2030. The impact of this is currently just 6% of estates in the UK pay IHT and with the rates frozen this will likely increase to 10% over the next few years as more estates are pulled into the hands of IHT moving forwards. With the biggest change the bringing in of pensions to the estate calculation, historically pensions had sat outside of your estate and therefore ringfenced from the IHT calculations, this has now been altered with pension pots being counted as part of your estate, coming into effect from April 2027.

As with any disruption or change, comes opportunity and for inheritance tax there really are many options available for individuals to start considering. I would recommend those of you reading this to get in touch about reviewing your estate planning with us and enable us to start looking at options are available for you, whether it be through protection, trust frameworks, conversations around pensions, gifting and many more.

Another controversial move for the chancellor was focused on agricultural and business property relief sector, with the chancellor announcing that from 6 April 2026 100% relief will only apply to the first £1 million of combined agricultural and business property, with 50% relief for anything above this and to AIM listed shares.

In other areas, there were changes announced in Income Tax sector, albeit the Labour party kept their manifesto pledge to not raise income taxes of working people. The key changes to note are as follows:

• The remittance basis of taxation for non-UK domiciled individuals (non-doms) will be removed from 6 April 2025 and replaced with a residence-based regime for the first four years of residence
• Income tax and National Insurance thresholds will rise with inflation from 2028-29
• The September Consumer Prices Index (CPI) figure of 1.7% will be the basis for uprating the Class 2 and Class 3 National Insurance contributions and Class 1 Lower Earnings Limit and Class 2 Small Profits Threshold for 2025-26
• Making Tax Digital for Income Tax (MTD ITSA) will be extended to sole traders and landlords with income over £20,000 by the end of the parliament
• From 6 April 2025 the interest payable on unpaid tax will increase by 1.5% percentage points
• Incentives for having electric company cars will continue to some extent until 2030
• The van benefit charge and the car and van fuel benefit charges will be increased from April 2025 using the September 2024 Consumer Prices Index
• The furnished holiday lettings regime will be abolished from 6 April 2025

For those in Private Equity and/ or with carried interest, the capital gains tax rate on carried interest will be increased from 28% to 32% from 6 April 2025, and from April 2026 carried interest will be taxed under the income tax regime. This will have a significant impact when moving to income tax levels and present important planning opportunities from a tax perspective moving forwards.  

The government is also considering new conditions for “qualifying” status, potentially including minimum investment or holding periods, to refine the tax regime for investment managers.

Finally, other notable changes to highlight are:

• The stamp duty land tax (SDLT) surcharge for additional properties will be increased from 3% to 5% above the standard residential rates from 31 October
• Air passenger duty rates for 2026-27 will increase by 13%, and by a further 50% for larger private jets
• From 30 October 2024 changes are being made to certain alternative finance tax rules for capital gains tax, corporation tax, income tax and annual tax on enveloped dwellings
• VAT will apply to private school fees from 1 January 2025

There is a lot to take in with the changes that have been announced and often the uncertainty of the impact this may have and affect on you can be overwhelming. That is why we are running a webinar on the 15^th of November at 11.30am (which will also be recorded), to discuss the budget in more detail but most importantly start to shed light on some of financial planning opportunities that have arisen and how you might start to implement them into your own circumstances.

As always, if anybody has any questions or queries please do not hesitate to get in touch!

Frankie