Your contribution to Labour’s fiscal "black hole"?

Everybody has their own future income and wealth to protect. You may need to act very soon before the first Labour Budget, now less than 3 months away, limits your options. Friend Partnership is a long-established accountancy practice with a significant track record of successful specialist tax advice, both corporate and personal.

Kier Starmer pledged not to increase income tax, National Insurance or VAT for “working people” but has repeatedly refused to rule out changes which will increase the tax take from Capital Gains Tax and Inheritance Tax. These taxes will directly impact business owners and anyone who is a shareholder in a privately-owned company or a member of a partnership, needs to consider their individual tax position.

There is increasing concern that the Chancellor will seek to realign Capital Gains Tax rates with Income Tax rates, meaning a Capital Gains Tax rate of up to a maximum of 45%.  Potentially, any increase in Capital Gains Tax could take effect from the date of the Budget.

Changes to the Inheritance Tax regime have been recommended by the left of centre Institute for Fiscal Studies. The amount of Inheritance Tax levied has doubled in the last 10 years and so IHT is likely to be viewed by the Chancellor as potentially rich pickings.

Whilst it is unlikely that the rate of Inheritance Tax will increase from the current 40%, it is very possible that the existing nil rate bands and residence nil rate bands could be cut. Further, the Institute for Fiscal Studies has recommended that the current reliefs for business property and agricultural property should be abolished or severely restricted so that only the first £500,000 of business or agricultural property would qualify for relief from Inheritance Tax.

Advice for those Potentially Affected

Such increases in capital taxes pose a significant threat to the wealth of entrepreneurs and owners of family businesses. Friend Partnership are specialist tax advisers, and we are receiving an escalating number of requests for advice from those who are potentially affected - accelerating succession plans, use of family trusts and will planning, lifetime gifts, employee ownership and even solvent liquidations are among the tax planning options we are putting in place.

If you have any questions, please contact David Gillies at david.gillies@friendllp.com or phone him on 0121 633 2007.