What can we expect from the Autumn Statement?

Edward Willday

2 mins

On Wednesday 30th October, the Chancellor the Exchequer, Rachel Reeves, will announce her first Budget, known as the Autumn Statement. She has indicated that the Budget will involve “difficult decisions”, to fill a £22bn “black hole” in the economy. However a key election promise made by the Labour Party was that they would not increase taxes on working people to boost the economy. This makes any rise in VAT, income tax or National Insurance for employees unlikely. In fact, the government have not waited until the Budget to start their announcements. In this article, we’ll discuss the announcements already made along with what we expect to come from the Autumn Statement.

Houses of Parliament in London viewed from across the River Thames

What’s been rumoured?

The new Labour government appear to have made the controversial decision to amend their winter fuel payments eligibility criteria. Only those who receive pension credits and some other means-tested benefits will now qualify, so make sure you double check if this includes you! In response to the criticism over this announcement, Keir Starmer said the income loss would be offset by an increase in State Pension by 4% from April 2025. This is due to the Pension Triple Lock, which protects State Pensions from inflation.

It has also been rumoured that VAT will be due on private school fees from 1st January 2025, and oil and gas firms must pay an energy windfall tax on profits. This is reportedly set to rise from 35% to 38% on 1st November, remaining in place until 31st March 2030.

What do we expect from the upcoming announcements?

Due to the election promise of not increasing taxes on working people, it is expected that announcements could centre around capital gains, inheritance tax, fuel duty or pension tax relief.

Capital Gains tax

Where an asset that has increased in value is sold, capital gains tax is charged on the profit. This is on a scale depending on the value of profits. 10% (or 18% on residential property) is charged on profits above £3,000. The rate increases to 20% (or 24% on residential property) on any amount above the basic tax rate. As this is lower than income tax, it could be seen to favour wealthier individuals. This in turn makes it an option for the Chancellor to make changes to. For example, Reeves could choose to treat Capital Gains the same as regular income and it would then be subject to income tax in the normal way.

Inheritance tax

Inheritance tax is currently charged at 40% of the deceased person’s assets above £500,000, assuming that you qualify for both the standard ‘nil rate band’ (NRB) of £325,000 and the resident NRB of £175,000. There are of course caveats to the treatment of this tax in certain circumstances and you should seek financial advice if you have an inheritance tax issue. In order to garner more tax revenue for the government, this threshold could be lowered, to encompass a greater number of estates. Another option could be to create bands of inheritance tax, so a higher rate of tax would be due on the largest estates.

Fuel Duty

Back in 2022, the then-Conservative government reduced fuel tax by 5p per litre. This was in a bid to ease one element of the cost of living crisis. This reduction in fuel duty is due to end in March 2025. It is deemed likely this cut in duty will be removed in the Autumn Statement. This will not only bring more tax revenue for the government, but could also back-up the government’s commitment to cutting carbon emissions across the UK. They are planning to reinstate the ban on the sale of new petrol and diesel cars from 2030 – previously pushed back to 2035 by the Conversative government. By removing the fuel duty cut, it could be seen to encourage the move to EVs and hybrid vehicles.

Woman filling car up with fuel at petrol station

Pension tax relief

When employees contribute to a workplace pension, they currently receive tax relief on these contributions in line with their income tax band. The Chancellor could choose to make this a flat rate of relief, for all incomes. This would mean less relief benefit for employees in the highest tax bracket. A consequence of this, though, that should be considered by the Chancellor before any announcement, is that it could discourage saving for retirement. This could potentially lead to wider issues in the future.

Other possible announcements

Whilst the Government pledged not to raise taxes for working people in their election manifesto, they could choose to raise National Insurance contributions for employers. The current contribution is 13.8%, calculated post-pension contribution. Rachel Reeves could choose to calculate this tax rate before pension contributions are paid, or else to raise the rate employers pay.

When will we know what’s been announced?

The Autumn Statement is due to be announced on Wednesday 30th October. It is usually read in Parliament at around midday. Keep an eye on our blog for a breakdown of the announcements, and what they mean for you! We are also producing a special podcast episode which will break down the budget and this is going to be released on Spotify on 6th November, so keep an ear out! In the meantime, for any advice on private pensions, ISAs and how to make your money work harder for you, contact our team.