In July, Andy Burnham replaced Sir Keir Starmer as the UK’s Prime Minister – coming in with a fresh perspective and some surprising ideas. The new PM has already implemented a handful of changes and implied that a social care reform and higher defence spending are high priorities. So, as the Autumn Budget draws near, there’s one prominent question: how will this new leadership affect tax policy?
Let’s take a look at the changes Burnham has already implemented and discuss the changes rumoured to be announced either in the Autumn Budget or sometime next year.
What changes has the new PM already confirmed?
Here are some of the first moves Andy Burnham made as PM:
- Removing VAT from domestic electricity bills – this will be effective from October 2026 and is estimated to save households an average of £45 a year. At the moment this change is temporary and is set to run for six months.
- Capping bus fares – from January 2027, single bus fares in England (excluding London) will be capped at £2.
- Reducing business rates for pubs, clubs and live music venues – this will be reduced by 20% from April 2027.
What could we expect from the Autumn Budget (and beyond)?
There’s been plenty of speculation about what changes Chancellor John Healey might announce during his first budget – set to take place on 28th October. Although little has been confirmed, it’s expected that the budget will bring changes to various tax policies. Some predictions include:
- Tax devolution – the PM previously confirmed that he will share a portion of income tax revenue with regional mayors in England, and enable strategic authorities to retain some of the income collected from business rates. Further details are expected to be outlined in the budget.
- Income tax threshold review – the PM has confirmed his commitment to Labour’s 2024 manifesto pledge not to increase income tax, VAT or National Insurance, but it has been suggested that he might review the freeze on the personal allowance threshold.
- Further business rate changes – following on from Burnham’s decision to cut rates for certain businesses, he’s also hinted that higher rates could apply to warehouses and major developments that don’t support the local community.
- Capital gains tax (CGT) reform – there’s been quite a lot of discussion regarding CGT and whether it should be increased or revised to align with income tax rates.
- Inheritance tax (IHT) review – this is another key area that the new government has previously mentioned, creating speculation that we could hear of an IHT review over the coming months.
- Property tax reform – it’s been hinted that a property tax reform could be on the cards, with a single annual tax (potentially either a ‘land value tax’ or ‘proportional property tax’) replacing council tax and/or stamp duty. However, it’s likely that any reform plans will be announced next year rather than in the upcoming budget.
What should business owners, landlords and individuals do now?
There’s always a heightened sense of uncertainty in the lead up to a budget (especially with a new leadership), but it’s a really good opportunity to review your tax position and seek professional advice now – rather than waiting until after the announcement. Here at Mitchell Charlesworth, we offer a comprehensive range of accounting services to help you make the most of your money. Let us support you in preparing for the budget – get in touch with our experienced team today or book a free, no-obligation consultation via our website.
