05/11/2025
BUDGET NOVEMBER 26
Ahead of the November (26) Budget it is impossible to assess the overall position, because there is no certainty whatsoever about what it will contain. The Chancellor went so far as to make a pre-Budget speech recently but no one could glean what was in her mind (except indicating that it will involve tax rises - but none of it will be her fault!)
For example, I have heard some commentators predicting that inheritance tax (IHT) will be affected by restricting reliefs but also other commentators predicting that they may be relaxed. On income tax, capital gains tax (CGT), SDLT and pensions it is impossible to know which way things will go (except that there will be more tax somewhere, somehow!)
The most useful suggestions that I have come across are:
Pensions - it is noted that any major alteration to pension structure and taxation has previously been flagged months in advance, which suggests that nothing will happen.
BUT - after the Conservative government changed trust rules in the 1990s they "Grandfathered" pre 1989 trusts (so that the new regime did not apply to them). This had long been the accepted way of doing things. When Gordon Brown came to power and decided that he would not use the ancient Budget briefcase nor attend the Mansion House dinner in traditional formal evening dress, he then decided (in 2006) to completely rewrite the legislation for the taxation of trusts - and have it apply to ALL trusts, including retrospectively to pre-1989 ones! Having scented tax blood, so to speak, the Conservatives in the next government introduced savage anti-avoidance legislation which was so retrospective that individuals whose tax returns for TEN years earlier had been settled now found them being reopened and new liabilities imposed on them! The moral of which - it is impossible to be certain that nothing will happen!
The most sensible summary of possible pre Budget action I have come across was from the Conservative Party, in a talk by Jacob Rees-Mogg, of all people! He said that the property market is currently frozen because of tax uncertainty.
However, pre Budget action can still be considered:
- use your maximum ISA allowance
- make any planned pension contributions
- consider CGT disposals, to lock in current CGT rates *
- consider IHT gifts (PETs), gifts out of income and other reliefs now, in case they disappear **
- pay dividends to lock in the current tax rates
He also talked about non-Doms and a potential exit tax (that might be applied to British citizens too).
As you can imagine, he went on to make some observations about recent economic and taxation policies and cited various areas where the effect has not been good (to paraphrase!) His closing words were the cheery advice that we were all going to have to 'hunker down'!
I think the specific points are well made (ignoring politics!). However * I do not think Business Asset Disposal Relief (BADR) will change this tax year (it might from 6 April), although if general CGT rates do go up that will probably be with effect from 27 November. Also, ** great care is required in taking IHT action, other than obvious PETs of e.g. cash to children etc.
The one thing notably absent is any suggestion that money should be withdrawn from pension funds. Industry experts point out that if this is done a) the money is taken from a tax exempt regime into a taxable one and b) once removed, anti-avoidance rules prevent it being put back. Coupled with the remarks about notice given for major pensions changes leads to the urging of caution.
In conclusion, I think tax planning will have to await the Budget, digest it, and then consider how things lie.
