When is the first current Labour budget?
Labour’s autumn budget is to be announced on 30th October.
Rachel Reeves, the current chancellor, will begin her announcement at around 12.30 pm at the House of Commons. It is expected to last around 1 hour.
Kier Starmer has already warned that Labour’s first budget is “going to be painful” and much speculation has followed about what will be included. Several tax changes have been rumoured and below we cover some of these that may impact people already with or possibly considering equity release.
Inheritance Tax:
There are fears that Labour is planning a raid on family wealth following death. This fear has followed a leaked recording from the current chief secretary to the Treasury when he was a shadow frontbencher before the election. It has prompted concerns that different aspects of relief that allow families to pay less tax will be targeted.
Labour may also review reliefs allowing people to give away their wealth earlier without paying tax duties.
Tax on pensions:
Inheritance tax may also play its part in tax changes to pensions. Pensions are not presently considered as part of your estate upon death and thus IHT is not applicable. This could change under new tax rules announced in the budget.
Labour may also reduce the amount you can contribute to your pension without losing tax relief. Other avenues for changes that have been speculated are reducing the tax relief on contributions and scrapping the 25% tax-free lump sum permitted at age 55.
Savings tax:
Possible caps could be placed upon ISA savings allowances. The Resolution Foundation has urged the Government to cap the overall maximum investment to an ISA at £100,000.
Returns on ISAs are not liable for tax however, interest earned on normal savings accounts can be liable. Frozen tax thresholds and higher interest rates have meant thousands more people are now exceeding their personal savings limit and find themselves having taxes to pay.
Council Tax:
Chief Secretary to The Treasury, Darren Jones, was seen in a leaked recording, when he was a shadow frontbencher, to announce that the “bands are out of date”. This has prompted speculation that there may be tax changes implemented on wealthy homes.
Sir Kier Starmer has also refused to rule out any potential council tax reform.
A re-evaluation of homes may also be on the cards. This could result in a rise for 119 of the 325 local authority areas according to the IFS.
Social Care:
The changes to the winter fuel allowance have already been announced causing around 90% of British pensioners to not qualify for this benefit.
Social care too is under the spotlight. Rachel Reeves has already announced that she will not proceed with the plan to reform social care put forward by the Conservatives. Part of this plan was to cap individual care costs to £86,000. The proposed charging reforms set out by the Conservatives would also allow those with less than £100,000 to access state support. This currently sits at £23,250 or less.
Labour has said that ending these reforms would save £4 billion by 2029-30.
All of the above is pure speculation at this time. However, should you wish to discuss how any possible changes could affect your equity release plans or future requirements, please do not hesitate to contact one of our experienced advisers.
