The Autumn Budget – an anti-climax for private wealth practitioners?

Ahead of the Autumn Budget, many had predicted changes to Capital Gains Tax (CGT) and/or Inheritance Tax (IHT) rules, thresholds and/or reliefs (see EPrivateClient - article (paminsight.com) in which Julia Cox provides commentary). CGT in particular seemed an easy potential target following the review by the Office of Tax Simplification which was published earlier this year and there has been continued speculation since before the Spring Budget that CGT rates would be aligned with income tax rates. 

However, with a focus on investment and public spending, the Autumn Budget was in many ways an anti-climax for the private wealth industry. With a few minor exceptions (an extension to the 30 day reporting deadline for residential property disposals being one), the core personal taxes were largely left alone. This means that, for now at least, individuals can continue to benefit from relatively favourable tax regimes with an increased level of certainty, creating a golden opportunity for longer-term tax planning.

So the status quo remains, for now. But is it right to assume that because there has been no overhaul of the personal tax thresholds or reliefs, that there will be no wider impact on the tax-paying public? It seems that the answer is no. The Office for Budget Responsibility has published new figures predicting that the number of people paying IHT on their death will more than double in the next five years, compared with the levels pre-pandemic. Although IHT thresholds and reliefs have not been reduced, the five year freeze to the £325,000 ‘nil rate band’ (which has been fixed at the same level since April 2009) coupled with inflation will mean that more people than ever will find their estate subject to IHT as their property and investments increase in value without a corresponding increase in their IHT free allowance. So although the Budget may have appeared to be light on tax reform, the true effects of the current measures on individuals and their families remain to be seen and should not be overlooked or underestimated.