As the days start drawing in again, all eyes are focused on the end of October when the Chancellor, Rachel Reeves, will deliver her first Budget. The timing of the day before Halloween lends itself to some joking scary references, but the context of the new Labour government’s initial Budget is sobering. Following the dramatic revelations about the poor state of the Treasury finances within three weeks of taking power, both the Chancellor and Prime Minister Kier Starmer have referred to “difficult choices” to be made. The first of these – restricting the Winter Fuel Allowances for pensioners – was immediately controversial. While Labour’s election manifesto ruled out income tax or national insurance rises, the promise to add VAT to private school fees is already in train for January.

Our feature in this edition of our newsletter focuses on the Chancellor’s likely targets for tax increases in the Budget. After promising not to raise taxes for working people, taxing other forms of wealth seems likely to be in her sights. Meanwhile the burden on those paying tax at higher rate is falling on ever more shoulders, with over a million more people becoming higher-rate taxpayers since the threshold freezes of 2021/22. New, higher rate brackets introduced in Scotland and the lowered additional-rate threshold from 2023/24 have swelled these numbers further. The threshold freezes are due to remain in place until 2028, although it is possible even then they will not be updated – the Chancellor may see retaining a strategy already in place as less difficult than introducing new measures.

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Despite expectations of an election during 2024, Rishi Sunak’s choice to go early on 4 July caught everyone from his party to the pundits by surprise. The six weeks of campaigning saw claim and counter claim around tax policy, the NHS, housing and other key issues which will have fed into voters’ decisions on polling day. Where summer is usually a calmer time in politics, that seems unlikely as a new government takes stock over the next few weeks and sets the direction of travel.

Tax has, of course, featured heavily and regardless of the election outcome, 2024/25 is set to be a challenge for many taxpayers. In the Summer edition of our newsletter, we give readers a nudge to check their tax status. The cumulative effect of tax allowance freezes will push some over a tax-paying threshold, but if you’re not already using self-assessment you will have to check what you owe and notify HMRC of tax owed.

Both the main parties committed to maintaining the State pension triple lock, which goes some way to reassuring those coming up to or in retirement. As we cover in our feature for this edition, the costs of retirement have escalated again. The annual review of the costs of living in retirement from the Pensions and Lifetime Savings Association showed that, in one year, the cost of retirement had increased by over 25% for a couple living outside London to enjoy a minimum level of retirement. So planning your contributions through your pre-retirement years is more crucial than ever.

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The days are getting lighter as we move into the time of year for regeneration and uplift. Certainly the government will be hoping that positive news on the downward trend of inflation will lift voters’ spirits in this election year. With the Bank of England expected to nudge interest rates down as well over the next few months, there may well be an ‘air of spring’ for many.

The Chancellor seemed to be hoping his additional national insurance cuts announced in the Spring Budget would boost that feeling. Although most of the measures that appeared were thoroughly teased, there were still a few surprises to affect your new tax year planning. There was an element of swings and roundabouts: for example, the increased threshold for the introduction of the high income child benefit charge from £50,000 to £60,000 came with an increase to the size of the band to which it applies from £60,000 to £80,000.

We explore this and other key takeaways from the Budget in the feature for the Spring edition of our newsletter. We also look at the probable lowering of interest rates in 2024 and the potential effects on your savings. If you’ve been holding cash deposits, either directly or in money market funds, the benefit you’ve seen from the accumulated rise in rates will begin to dissipate.

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