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Labour will raise two taxes for UK households in Autumn Budget_l

Lang August 23, 2024

The new Labour Party Chancellor will reportedly look to raise cash from IHT and CGT to raise the new Labour Party government’s coffers.

Rachel Reeves is reportedly set to raise money from inheritance tax AND capital gains tax in the Autumn Budget. The new Labour Party Chancellor will reportedly look to raise cash from IHT and CGT to raise the new Labour Party government’s coffers.

The Guardian has reported the changes are among a raft of new measures, alongside sticking to plans for a 1% increase in public spending even though it would involve cuts for some Whitehall departments. Other planned changes include changing the way debt is measured to exclude the Bank of England.

Capital gains tax is charged on the profit made from the sale of an asset that has increased in value, with some examples including stocks that are not held in ISAs or second homes. CGT is payable by individuals, but also self-employed sole traders, partners in business partnerships and company owners, among others. It starts at a rate of 10% (or 18% on residential property) on profits above £3,000. It then rises to 20% on any amount above the basic tax rate, or 24% on residential property.

“No government at all serious about growth would hike CGT on entrepreneurs selling a small business”, Tina McKenzie from the Federation of Small Businesses (FSB) told the BBC. “Investing in a small business is already one of the least tax-efficient things anyone can do with their money,” she said, adding that she hoped the party would continue to work “in partnership” with business.

Inheritance tax, currently paid at a rate of 40%, is charged on the part of a deceased person’s estate above a threshold of £325,000. But it only applies fewer than one in 20 estates.

No tax is paid if the estate is valued at less than £325,000, or if anything above this threshold is left to a husband or wife, civil partner, charity, or a community amateur sports club. And if a home is part of the estate and a person’s children and grandchildren stand to inherit it, the threshold can go up to £500,000.