August 2024 Newsletter | Cylchlythyr Misol Awst 2024
On 29 July 2024, the new Chancellor, Rachel Reeves, announced that she would need to make "difficult decisions" on tax at her first Budget, which has been scheduled for 30 October. Ahead of this Budget, we review what has already changed and what could change before the Budget.
1) What has already changed?
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From autumn 2024 onwards, winter fuel payments will only be available to pensioners on pension credit or on other means-tested benefits.
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VAT of 20% will be added to private school fees from January 2025 onwards. We expected the Government to announce a clause to clawback VAT on any prepaid fees and this has been confirmed. Any advance fee payments made from 29 July 2024 onwards will be treated under the new VAT guidance (i.e. 20% VAT will be payable). Any advance fees paid before 29 July 2024 will be subject to review by HMRC (with the individual school).
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Non-domicile tax status abolished from April 2025 onwards, replaced with a new residence-based regime (this appears to be in line with the announcement made by the previous Government in March 2024) - we await the full details of this new regime.
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Abolition of Furnished Holiday Let rules from April 2025, as previously announced by the Tory Government in March 2024. This includes the end of claiming Business Asset Disposal Relief (aka Entrepreneurs Relief) when selling a holiday let, where capital gains tax rates of 10% were available. Furthermore, only basic rate tax relief will be available for mortgage interest costs from April 2025 onwards.
2) What could change on 30 October?
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Capital gains tax rates: there are rumours of significant increases in capital gains tax rates, therefore if you are looking to sell an asset, you may wish to sell the asset before the Budget to ensure current tax rates can be used.
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Inheritance tax reliefs: these may be subject to change, including:
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AIM share portfolios: these can become exempt from inheritance tax, by claiming Business Property Relief, if the shares are held for at least 2 years (and other certain criteria are met).
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Let farmland: Agricultural Property Relief at 100% can be claimed if farmland is let to a tenant farmer. This has led to the unforeseen scenario of substantial amounts of farmland being purchased primarily for tax planning purposes.
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We will continue to keep you updated on significant tax changes and Government announcements!
