Labour's Budget fright fest: the FT Adviser tax table

Labour chancellor Rachel Reeves' first Budget in office may well be a perfect pick-and-mix of tricks and treats when it comes to taxation.

The £40bn in tax rises is the largest any chancellor has made since former Conservative chancellor Norman Lamont in 1993, at £38.5bn.

That said, in a non-representative X poll from one financial adviser, 58 per cent of peers responding to his 'reaction' poll on the social media platform thought the Budget was largely positive for the UK as a whole, although many commented they will have "their work cut out for them" advising on IHT.

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Amid the 30,000 emails FT Adviser received during the Budget Week, there had been many spooky predictions, some of which came eerily true.

Take, for example, the word of Ingrid McCleave, partner at law firm DMH Stallard and tax specialist, who said: "It would be an easy win for Rachel Reeves to change the asset acquisition value in the hands of beneficiaries to the original purchase price paid by the deceased, in effect potentially charging the same asset to both IHT and CGT.

“This would also be a back door way of taxing IHT exempt estates without bringing them into the charge to IHT. A potential ‘double death tax’.”

But most commentators have agreed that tax had to be a core tenet of this Budget, with borrowing costs soaring and a need to build a Britain that works for working people.

Darius McDermott, managing director of Chelsea Financial Services, said: "In short, the Autumn Budget brings both challenges and openings for investors.

"Chancellor Reeves walks a fine line, balancing tax hikes, borrowing, and public investments to maintain stability while encouraging economic growth.

"By leaning into tax-efficient strategies, reassessing exposure to vulnerable sectors, and staying alert to market signals, you’ll be better positioned to ride out any volatility that may lie ahead."

Perhaps the wisest words have come from those who advocate taking simple, sensible steps to preserving wealth without losing their heads.

Take Mark Polson, founder of the Lang Cat, who wrote: "You’ve schooled your clients forever that you work the plan, not the tax subsidy. You never let the tax tail wag the planning dog."

And now for what you've all been waiting for: the now-famous FT Adviser tax table.

	2024 October Budget (Labour)	2024 March Budget (Conservative)	Autumn Statement 2023
Income tax & personal allowances	No change to the thresholds and no further freezes to the tax bands beyond those set by the previous government. From April 2028, personal tax thresholds will be uprated in line with inflation.	As anticipated, there will be a 2p cut in National Insurance.	Abolishing Class 2 NICs for self-employed people, saving the average SE person £192 a year. Reducing Class 4 NICs by 1 per cent. Cut main rate of employee national insurance to 10%. Income tax bands remain frozen til 2027
Dividend tax	Confirmation of the reduction in the tax-free allowance for dividend income from £1,000 to £500, following a previous reduction from £2,000 in 2023. Individuals with dividend income exceeding £500 will incur dividend tax based on their income bracket.	-	- Previously announced reductions to go ahead.
Pension allowances	2025-26 - increasing the State Pension by up to £470 per person in line with the Triple Lock. The Pension Credit Standard Minimum Guarantee will also increase by 4.1% from April 2025.	Continued commitment to triple lock.	Commitment to the triple lock, meaning an extra £900 a year per person after April in 2024.
Capital gains tax	Lower rate of Capital Gains Tax will rise from 10% to 18%, and the higher rate from 20% to 24%	Reduce higher 28% CGT rate on residential property to 24%.	-
Bank levy	-	-	-
Inheritance tax	Value of pension pots will be added to the total value of other assets and if over the IHT threshold of £325,000, aside from other exemptions, will be taxed in the same way. Reforms to agricultural property relief and Business Property Relief from April 2026.		No reforms
Corporation tax	Freezing of these rates.	-	Honouring the commitment to help companies investing in the UK by making full expensing permanent.
Tax on savings interest	Isa thresholds remain in place. Confirmation that plans for a British Isa have been ditched.	Introduction of the British Isa for an additional £5,000 annual investment on top of the existing £20,000 Isa allowance.New British Savings Bond fixed rate for 3 years.	Simplifying Isa regime, digitalising the reporting scheme and allowing the IFISA to invest in long-term asset funds and open-ended property. Subscription limits remain across the range. Fractional shares allowed.
National Insurance contribution	1.2% increase in Employers' National Insurance from 13.8% to 15%	Employee NI cut by another 2% from 10 to 8 per cent; and self-employed cut by 2%, from 8% to 6%.	Abolishing Class 2 National Insurance contributions for self-employed people, saving the average SE person £192 a year. Reducing Class 4 NICs by 1 per cent.
VAT	From Jan 1 2025, 20% VAT will apply to all education, training and boarding services provided by private schools.	VAT registration threshold rises from £85,000 to £90,000 as of April 1.Duty frozen again until February 2025.	Duty on alcohol frozen until August 1 2024.
Stamp Duty Land Tax	Stamp Duty surcharge on second homes by 2% to 5% effective from tomorrow (October 31)	Multiple dwellings relief to be scrapped in June 2024.	Extending the growth market exemption, a relief from stamp duty and stamp duty reserve tax to include "smaller, innovative growth markets" in- January 2024.
Environmental taxes and energy support for homeowners	Continuing with the Energy Profits Levy, which will increase to 38% as of November 2024 and extend through 2030.	Energy profits levy to be extended.	Climate Change Levy - maintaining freeze. Reduced rates from one year from April 2025.
Business rates and Restart	For 2025-26, the small business multiplier will be frozen.	Extending the Recovery Loan Scheme and renaming it as the Growth Guarantee Scheme	Freeze small business multiplier for a further year. Extend the 75 per cent business rates discount for retail, hospitality and leisure for another year.
Entrepreneurs' relief (Business Asset Disposal Relief); R&D and R&D Expenditure Credit	BADR, which provides a reduced CGT rate of 10% on qualifying business disposals up to a lifetime limit of £1m, remains under review. The BADR and Investor's Relief rates will rise to 14 per cent from 6 April 2025, and will match the main lower rate of 18 per cent from 6 April 2026. The R&D Expenditure Credit will see an increase for certain high-priority sectors, including energy, AI, and life sciences.	-	Merging R&D Expenditure Credit and SME schemes from April 2024. Reducing rate at which loss-making companies are taxed from 25% to 19%.
Health and Social Care tax	Reeves committed to increasing support for social care, addressing both funding shortfalls and expanding services, especially funding for NHS.	-	-
Residential Property Development Tax and Mortgage scheme	Reeves outlined that RPDT, introduced in 2021 to fund building safety, will continue. Launch of Freedom to Buy as rebrand of Mortgage Guarantee Scheme	-	Government will extend the mortgage guarantee scheme for an additional 18 months until the end of June 2025.
Employment Allowance relief	Smallest businesses will see an uplift to Employment Allowance to £10,500 next year.	-	More guidance expected to help self-employed
IR35	-	-	Autumn Finance Bill 2023 will allow HMRC to reduce the pay-as-you-earn liability of a deemed employer to account for taxes paid by a worker and their intermediary on payments received, where an error has been made in applying the off-payroll working rules.
Childcare benefit	Continuing with reforms to help working parents and £1.8bn expansion of government-funded childcare.	From April - high income CB threshold rises £50k to £60k and top of the taper threshold to £80k.By 2026, high income CB charge will be based on household income rather than individual earnings.	Continuation of Budget pledges
Pushing people on Universal Credit back to work	DWP to carry out additional checks on UC claimants who have changes in their circumstances, as part of a £110mn investment in 2025-26 to tackle fraud and error. This is expected to save £250mn in 2029-30.	-	Mandating a work programme to help unemployed back to work; those who do not engage with this will have benefits stopped after six months.
Tax Avoidance	Tougher measures and expansion of HMRC's teams to tackle avoidance, as with the DWP.	-	New powers to DWP to tackle fraud and error. Tougher consequences for promoters of tax avoidance schemes.
Non-Dom and overseas taxation	Scrapping the Non-Dom regime from 6 April 2025 & creating a residence-based regime.	Removal of the remittance basis for taxation, effectively scrapping the expatriate regime for non-UK domiciles. Non-doms who've lived in UK for 12 years to pay £50,000 unless they invest in UK business as this can offset it.	-
Fuel Duty	Fuel duties frozen again in 2025	5p cut extended again for another 12 months and no inflation-linked increase.	Temporary 5p cut in fuel duty rates until April 1 2024.
Household Support Scheme	Household Support Fund extended with £421mn to support vulnerable households	Extending the Household Support Fund with an extra £500m for a few more months.	Household Support Fund to finish March 2024.
Pension schemes	The government is removing the opportunity for individuals to use pensions as a vehicle for IHT planning by bringing unspent pots into the scope of IHT from April 2027, which will affect around 8% of estates a year.	DC pension schemes to be given the freedom to invest in more UK-based enterprises and infrastructure.