What the Autumn Budget could mean for your clients

Find out how potential changes in the Autumn Budget could impact your clients’ financial strategies, and explore ways to help them stay ahead of new developments.

Chancellor Rachel Reeves is set to deliver Labour’s first Budget in 14 years on 30 October. The details are still unknown, but speculation abounds around potential policy changes that could affect your clients’ financial plans.

This period of uncertainty provides a great opportunity to strengthen your relationships with the people who rely on you for advice by offering clear guidance, strategic planning and reassurance as we wait for the details.

In this newsletter, we highlight possible areas of change and how you can help your clients prepare.

Pensions and retirement planning

Pensions are always a key focus in any Budget, and Labour has committed to retaining the ‘triple lock’ on state pensions. However, other changes – such as adjustments to pension tax relief or limits on tax-free lump sums – may be on the horizon.

What could change?

Pension tax relief. Labour may shift towards a flat-rate relief (such as 30%), reducing the benefits for higher earners who currently enjoy relief at their marginal tax rate.

Lifetime allowance. While the reintroduction of the lifetime allowance cap seems less likely, there could be new limits on tax-free withdrawals or reductions in lump-sum allowances.

How can you help your clients?

Review contributions. Encourage clients to review their pension contributions now. If tax relief is reduced, high earners may find it less advantageous to make large contributions.

Explore alternatives. If pensions become less tax-efficient, discuss other investment vehicles to use alongside them that may offer better tax advantages under any new rules.

Promote long-term planning. With uncertainty surrounding pension changes, it’s crucial to avoid hasty decisions. Help clients focus on the long term and encourage them to increase their contributions if they can afford to in order to maximise potential tax advantages.

Inheritance Tax

IHT reform is a contentious issue, with Labour potentially reducing tax-free allowances or adjusting rates. There’s also talk of extending IHT to include certain types of pension pots, which could affect retirement and estate planning dramatically for some people

What could change?

IHT-free band. The current ￡325,000 threshold may be reduced, and exemptions for passing a residence to direct descendants could be targeted.

Capital Gains Tax (CGT) on death. Labour may consider abolishing the CGT step-up in basis on death, which would mean beneficiaries could face a larger tax bill when selling inherited assets. While this change could increase CGT liabilities, IHT would still apply, potentially leading to concerns about double taxation.

Pensions. Labour might reform the IHT rules surrounding pensions, particularly by removing the tax relief for individuals under 75, which is a significant change that could drive earlier estate planning.

How can you help your clients?

Encourage early estate planning. With potential changes to CGT on death, clients may want to consider gifting assets or using trusts to minimise their tax exposure.

Use available reliefs. Explore tax-efficient vehicles such as Business Relief investments to help mitigate exposure to both CGT and IHT.

Capital Gains Tax

Labour may look to increase CGT to boost revenue. Recent cuts to the CGT annual allowance – from ￡12,300 in 2020/21 to just ￡3,000 in 2024 – mean more people are already being drawn into the tax net, and further reductions or rate hikes could be on the way.

What could change?

Rate alignment. There is speculation that CGT rates could be aligned with income tax rates, doubling CGT for higher earners.

Abolishing exemptions. Expensive items like antiques, second-hand cars and jewellery, which are currently exempt from CGT, could see their status revoked. Even tax-free ISAs might come under scrutiny.

How can you help your clients?

Crystallise gains. If CGT rates are set to rise, it may be advantageous for clients to realise gains at lower rates before the change takes effect. You may want to have a conversation with them before the end of the tax year to ensure they secure current rates.

Strategic planning. For clients facing significant CGT exposure, consider tax-efficient strategies such as Venture Capital Trusts or Enterprise Investment Schemes to defer tax liabilities.

Other potential changes to look out for

Beyond pensions, CGT and IHT, several additional areas could be impacted by the Autumn Budget. Keep an eye on these developments to help your clients stay ahead:

Savings and investments. Changes to ISAs could affect long-term savings strategies and tax efficiency. Review your clients’ savings plans and recommend adjustments to maintain tax efficiency and meet long-term goals.

Income tax and fiscal drag. Frozen tax thresholds until 2028 mean some clients could find themselves in higher tax brackets due to wage inflation. Explain the impact on net income and explore salary sacrifice or other tax-efficient strategies to mitigate the effects.

Business owners and entrepreneurs. Changes to Business Asset Disposal Relief, Corporation Tax or National Insurance contributions could affect business structures and investment strategies. For your clients who own companies, review business structures and explore tax-efficient planning options to minimise liabilities.

Property taxes. Adjustments to Stamp Duty Land Tax, particularly for non-UK residents or second-home buyers, could influence clients’ property plans. Reassess property investments and consider the timing of purchases or sales to optimise tax outcomes.

Self-employed workers. Potential reforms to National Insurance contributions, dividend taxes or tax-deductible expenses could have an impact on income. If you have selfemployed clients, review their business expenses and income structures to ensure continued tax efficiency.

VAT on private schools. Labour’s expected imposition of VAT on private school fees could have a financial impact on clients with children in private education. Help them plan ahead for these increased costs by exploring options such as adjusting savings plans, considering alternative education funding methods or reallocating investments to cover the added expenses.

Non-domiciled status. Shortening the period non-domiciled individuals can remain exempt from UK tax could lead to increased tax burdens on global wealth. For any clients affected, review their residency status and consider alternative tax-planning strategies to mitigate the impact