As part of the Tax Talks in Five series from Primondell the UK specialists in tax training
Episode 1 in the series, Jeremy Mindell discusses the impacts of the 2024 Autumn Budget
You can also read the talk in the transcription below
Transcribed by TurboScribe.ai
Welcome to Tax Talks in 5, brought to you by Primandel, one of the UK’s leading specialist tax training firms. The annual cost to businesses of employing a worker will rise by about £2,000 because of the increases in national insurance and the minimum wage, according to the Centre of Policy Studies. The changes introduced by Rachel Reeves has made it more expensive to employ low-paid workers.
Some of the country’s biggest retailers have already said job losses are unavoidable. The devil was always going to be in the detail, and has Rachel Reeves fully thought through the repercussions of the details in her first budget? I’m Sharon Portner, and in this episode, Primandel’s director and expert on tax training, Jeremy Mindell, is going to give us five action points for tax advisors. Welcome to our first podcast in 2025, Jeremy, and let me start by asking, why do you think Rachel Reeves’ budget has gone off the rails? Thank you, Sharon.
There are two roles that a Chancellor has, the first of which is to balance the books and keep the public finances in order so that the bond markets, where the government raises money, feel confident in them. And you may recall that a bit over two years ago, Liz Truss and Kwasi Kwarteng failed in that, and their budget got shot to pieces very quickly. The second element is to create conditions for a growing economy, and that gives people the confidence to invest, to take on new staff.
And putting a very large increase, particularly disproportionately, one may argue, on lower pay, on employing lower paid staff by raising national insurance, but also cutting the threshold at which employers NIC is raised, has certainly dealt a blow in those areas. And I think that the other problem is the bad news keeps on coming through with announcements from companies about how they’re going to react to this raise in what is effectively a jobs tax. And that’s why I tend to feel this budget is a gift, not to most people, but it’s certainly a gift that keeps on giving to the opposition, as companies carry on announcing retrenchments and changes in their policies, and blaming it on the government because of the national insurance rises, and of course the very large rise in the minimum wage due to take place in April.
So Jeremy, can you tell us what should tax practitioners and tax advisors be dealing with in this new environment? My first point would be to say, number one, is don’t panic. Always get your information in first before you decide what to do, and don’t take precipitate action. So for example, the people who decided to cash in their pensions because they were worried that the tax-free lump sum would disappear, now have a real problem because not only have they got money which they haven’t planned for what they’re going to do with, and would be now in a fully taxed environment, but also they can’t put more into the pension, or it’s very limited in what they can put in.
So there’s been lots of stories in the press, and never panic. The second element is to gather as much information about your own personal finances, your business, your position, and in that respect, my third point is always good planning sits on the foundations of good compliance. So get your tax return in, the January 31st deadline is approaching, and then use that tax return as the basis for what is my financial position? Do I have surplus income? Should I be putting more in a pension? What’s my marginal rate of tax? Should I put more in an ISA? Can I afford to give money away if I’m concerned about IHT? And in terms of capital gains tax, do I have a position where I’ve got gains which I ought to realise before the end of the tax year? So that would be my third point.
The fourth point I think would be about the fact that Rachel Reeves has announced a staging of tax rises. Some of them took place immediately on the 30th of October, so there wasn’t much you could do about them, but others have been staged. So the VAT on private schools comes in this month, the rise in employees NIC comes in April, the rise in IHT or the cutting of the allowances for farms and smaller businesses comes in April 2026, and the changes in pensions come in April 2027.
So again, always look because there are opportunities to plan elements on that basis. So employers who are paying bonuses might decide to pay those bonuses in March rather than April and avoid the national insurance rise at that point. Thank you for your insight, Jeremy.
And just finally, as your fifth action point, do you think the government can change course? I think it’s possible. I think that a lot of government supporters, and indeed their voters, have underestimated the difficulties that I think this budget may cause. It’s difficult to see how they will change what is already in legislation, but it is quite possible that some sort of deal would be found on IHT, for example, because the legislation has not even yet been published.
And given the amount of public pressure, it’s important to think about would there be any modifications. And there have been some already. I mean, private equity was going to be originally taxed fully as income at full income tax rates, and the government after consultation decided to reduce that to a lower figure.
So they do listen, and there are changes that could happen. And that you need to keep abreast of what is going on and what changes may happen, because this is certainly quite an uncertain time. We’ve had a period of relative tax stability in terms of the measures, in terms of certainly capital, and indeed in terms of payroll costs.
We’re now entering a period of greater uncertainty. And therefore, I would be saying you need to keep an eye on those changes, but also where elements do not change. I wrote an article about taxation in December.
Take advantage of the tax-free elements that are available in certain tax-advantaged share schemes, because as the rate of NI goes up, those tax-free and NI-free benefits that you can get become comparatively more attractive. Thank you, Jeremy. Primondell will be doing a number of training sessions to help keep you up to date.
And if you have any questions or comments on today’s episode or any tax matter, please visit primondell.co.uk or email Jeremy directly at jpmind20@gmail.com
Transcribed by TurboScribe.ai
