This week's announcements made for an interesting Budget, not only because it was the first Labour one in 14 years and the first-ever by a female chancellor.
Ahead of the Budget, it was thought the government was looking to raise £20bn to cover the deficits it had discovered, however a report published by the Office for Budget Responsibility revealed the tax take as a result of the outlined changes will be the highest on record, increasing spending to £70bn a year, with half raised by tax increases and half through increased borrowing.
There haven’t been any large market movements as a result of Budget, although it’s noticeable that gilts, which had a poor week ahead of Rachel Reeves' speech, have started to rally.
The Aim market also seems to have gained back some of the performance it had lost in the months before, weakness which could be attributed to investor jitters around Budget and potential changes.
For me there are five key adjustments which may impact private investors:
- Capital gains tax: Rates will rise from 10 per cent to 18 per cent for basic-rate taxpayers, and from 20 per cent to 24 per cent for higher-rate taxpayers. The annual CGT allowance remains at £3,000
- Non-Dom tax status: The non-dom tax regime will be abolish abolished, shifting the focus from domicile to residency
- Inheritance tax on Aim shares: Relief on Aim shares will decrease from 100 per cent to 50 per cent for holdings of at least two years
- Business and agricultural assets: From April 2026, the first £1mn of combined business and agricultural assets will be exempt from IHT, with a 20 per cent tax for amounts above this threshold
- Pensions and IHT: “Unused” pension pots will be subject to IHT from April 2027, changing the current exemption status. The exact details of this are still be finalised.
Eleanor Ingilby is head of high net worth and a senior portfolio manager at Atomos
