What could be included in the upcoming Labour Budget on 30 October?

When then-chancellor Alistair Darling presented his Spring Budget on 24 March 2010, he could not have known that this would be the last Labour fiscal announcement for nearly a decade and a half.

Of course, with the Labour Party succeeding at the polls during the general election this year, we will see the first Labour Budget after 14 consecutive years of Conservative rule.

New chancellor Rachel Reeves has now set the date for this announcement as 30 October, when she’ll lay out the new government’s fiscal plans and priorities for the coming year and beyond.

The starting point for this initial Budget will no doubt be the £22 billion “black hole” that Reeves has accused the outgoing Conservative government of leaving in the public finances.

Both she and Keir Starmer have talked at length of the challenges this poses, with the prime minister describing the upcoming Budget as “painful” with “more difficult decisions to come”, MoneyWeek reports.

You may well be concerned about what could be included in Reeves’ first Budget as chancellor. In fact, at Caliber Financial Management, we’ve had a handful of questions and queries about what the Budget could mean for clients’ wealth, and what they might want to do next.

So, find out what we might be able to expect from the Labour Budget on 30 October, and why it’s important to remain calm and not make any knee-jerk decisions before we know exactly what changes will come into place.

The Labour manifesto included promises that may be confirmed in the Budget

Fresh off the back of Labour’s general election victory, it’s likely that we’ll see the confirmation of some of the promises the party made in its manifesto and on the campaign trail during the Budget.

For example, the party committed to:

• Removing the VAT exemption enjoyed on private school fees
• Introducing a new taxation system for non-domiciled, or “non-dom”, individuals
• Replacing the universal Winter Fuel Payments for older people with a means-tested system
• Retaining the State Pension triple lock, which ensures that these payments continue rising over time
• Scrapping plans to cap how much people pay for adult social care, set to have come in from October 2025.

Meanwhile, Labour also promised not to increase taxes for “working people”, committing to not increasing:

• Income Tax
• National Insurance contributions (NICs)
• VAT
• Corporation Tax

Of course, nothing is impossible, and the government may U-turn on any of these decisions. But for now, it seems that we can expect Labour to commit to these pledges.

Other tax regimes could be on the table for reforms or increases

One of the most notable aspects of this Budget is that alongside the £22 billion hole to fill, the government has some ambitious spending plans. In the Labour manifesto, the party said its first steps would include:

• Shortening NHS waiting times
• Recruiting 6,500 more teachers
• Setting up Great British Energy, a publicly owned energy company.

These all have the potential to be expensive ventures and will need funding somehow. To do so, it’s highly possible that we’ll see increases or reforms to other taxes.

Below are three that could be targeted in Reeves’ first Budget.

1. Capital Gains Tax

Changes to Capital Gains Tax (CGT) could well be on the chancellor’s list.

You may face CGT on profits generated from selling or “disposing of” certain assets, such as non-ISA investments and valuable possessions including art and jewellery.

Any gains you generate over your Annual Exempt Amount (£3,000 in 2024/25) could be taxable at the following rates:

• 10% (18% on property excluding your main residence) for basic-rate taxpayers
• 20% (24% on property excluding your main residence) for higher- and additional-rate taxpayers.

To increase the government’s CGT receipts, it’s possible that the chancellor could reduce or even entirely remove the Annual Exempt Amount, making all profits potentially taxable.

Another suggestion is bringing the CGT rates in line with Income Tax. This would effectively double the basic and higher CGT rates, with an even greater increase for those in the additional-rate band.

2. Pension tax relief

When you contribute to your pension, you can enjoy tax relief depending on your marginal rate of Income Tax. In essence, this means a £100 pension contribution “costs”:

• £80 for basic-rate taxpayers
• £60 for higher-rate taxpayers
• £55 for additional-rate taxpayers.

However, one much-speculated change is for the chancellor to make this a flat 30% rate. In the example above, that would see a £100 contribution cost everyone £70.

This would be good news for basic-rate taxpayers, but could make pension saving less attractive for those in the higher- and additional-rate bands.

3. Inheritance Tax

Inheritance Tax (IHT) is one of the more controversial levies in the UK. If your estate exceeds the nil-rate band of £325,000 (2024/25), your beneficiaries may face 40% IHT on the excess when you pass away. You might also benefit from the additional residence nil-rate band (£175,000 in 2024/25) if you pass your main residence to your direct descendants, such as children and grandchildren.

There are various rules and exemptions that the chancellor could change to increase the IHT burden. For example, pensions currently fall outside of your estate for IHT purposes. However, as pensions are often one of savers’ biggest assets, these could be brought within the IHT regime.

Alternatively, the nil-rate bands could be frozen for longer – they’re currently fixed until April 2028 – or even reduced to increase the amount of your estate that’s liable for IHT.

It’s important to stay calm and find out what’s happening before making any changes to your plan

The idea of these changes and the many others being bandied around in the news may be a cause for concern. Indeed, you may well be thinking about what you can do now to protect your wealth.

Yet, before you start making changes to your plan, it’s worth taking a breath and slowing down. It’s important to wait and see the details of what the Budget includes, rather than rushing into decisions now.

Otherwise, you might make mistakes as you look to quickly enact changes, and you could even end up altering your plan only for these potential tax reforms or increases not to come into effect.

This is where we can really help at Caliber Financial Management. We’ll cover all the Budget announcements as they occur and make recommendations accordingly, depending on what happens on 30 October.

If you’re concerned about what the Budget might mean for you, or you’d like help with any aspect of your finances, please do get in touch with us.

Email contact@caliberfm.co.uk or call 01525 375286 to speak to us today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.