Anticipated tax hikes ahead of the Autumn Budget

Ahead of the Autumn Budget on the 17th November 2022 here are our predictions on the upcoming tax changes that could impact your personal and business taxes over the next year.

With a £50 billion UK deficit, it is predicted that the current Tory government will look for £24 billion worth of tax savings.

Our predictions of tax changes that could be announced:

Freezing of income tax thresholds - Impacting employees, directors, and self employed

Sunak and Hunt hinted of an extension of an income tax threshold freeze when they said everybody would end up paying more tax.

Currently, the income tax threshold is frozen till 2026. Hunt is expected to extend the current four-year freeze until 2028, dragging millions of people into the income tax system for the first time or into higher tax bands.

Freezing of the Inheritance Tax band threshold - impacting grieving families

Inheritance tax (IHT) is a tax not just for the super wealthy, as it was originally intended. In fact, it impacts more middle class families whose main asset is their family home, with residential properties having grown in values across the UK over the last couple of decades.

IHT inherently is seen as an unfair and as a form of double taxation, as tax is being paid on assets which have already been paid for - and tax being paid on - during your lifetime.

With a growing aging population, an ever increasing number of families will be impacted by the freezing of the IHT threshold, currently set at £325,000 per person, or £600,000 per couple, before 40% IHT is levied on total asset value above this threshold.

There are things you can do now in your lifetime to mitigate the IHT tax burden left behind for loved ones, and more of us should now prioritise estate planning ahead of other long-term financial strategies in our opinion.

Options include looking at investments that qualify for tax relief, gift relief, gift allowances and establishing trusts, amongst others.

There are therefore legitimate solutions to limit the amount your loved ones may potentially face due to Jeremy Hunt’s anticipated sly tax hike for families.  The key is to act sooner rather than later.