We have a new chancellor
If I was to say that was a surprise, would you detect a hint of sarcasm? Unless you have been hiding under a rock this week the election was won by Labour, and as anticipated Sir Keir Starmer has appointed Racheal Reeves (no relation) as the chancellor. The questions are when and what will be in the Budget.
There is a section of the population that believes now could be a good time to leave the UK and my colleague Jon Golding supports this argument in his blog relating to those who receive a UK pension who could move abroad long-term and make use of the tax treaty to avoid tax in both countries. I’m sure this article will be of interest to many.
Could this be the year, after England's penalty win against Switzerland on Saturday in the quarter-finals of the Euros, it should be remembered that the last time England last won an international championship was in 1966 under a Labour government
For the observant ones of you out there, you may recall that a big announcement was to be made this week, however, I decided to take a few days away from LinkedIn due to the election as well as a lot going on both personally and within the business. If you want to find out more grab your coffee and let's get started.
All change!
Congratulations to, Rachel Reeves who has become the UK’s first-ever female Chancellor,
With a political shift, significant tax changes are on the horizon. What can we expect under the new Labour government?
Labour will move swiftly to set the financial agenda for the new government, already they have committed to one major fiscal event a year to give families and businesses due warning of tax and spending policies.
Targeted Tax Hikes Labour’s key manifesto announcements focus on tax increases aimed at wealthier voters, including:
Private Schools: Implementation of VAT and business rates.
Non-Dom Tax Loopholes: Closing these loopholes.
Stamp Duty: Increasing by 1% for non-UK residents purchasing residential property.
Inheritance Tax: Ending the use of offshore trusts for avoidance.
Private Equity: Abolishing the 'carried interest' loophole.
The first of these proposals, particularly the VAT and business rates on private schools, has caused quite a stir, and the timings for its introduction are unclear. Given the retrospective taxing of fees seems out of scope, the earliest possible implementation would be the start of the spring term in January 2025, though it may not take effect until September 2025.
Businesses can look forward to stability around corporation tax, with Labour promising to cap the rate at 25% for the next five years. Additionally, a roadmap for business taxation will be published, allowing businesses to plan their investments with confidence. Changes to the business rates system are expected to incentivize investment, reduce uncertainty, and alleviate the burden on high streets.
For small businesses, Labour commits to maintaining the annual investment allowance and a full expensing system for capital investment. They have also pledged to provide clarity around allowances to help businesses make informed investment decisions.
Tax Avoidance Crackdown Labour plans to recover £5bn from non-compliance by cracking down on tax avoidance, which will require additional funding for HMRC. This initiative aims to address HMRC's current issues with low service standards and the pressure to cut costs.
No Increase in Core Taxes Labour has ruled out increases in income tax, National Insurance, and VAT. However, they have not made the same commitment regarding capital gains tax or pension tax relief. The earlier stated intent to reintroduce the lifetime allowance was notably absent from the manifesto and for those buy-to-let landlords considering disposing of properties the window of opportunity to take advantage of the reduced higher rate of 24% may soon be over.
Windfall Tax A new £1.2bn windfall tax on oil and gas companies will partially fund Great British Energy, a publicly owned clean power company.
With a Budget pencilled in for late September, early October it’s going to be a busy few weeks for Rachel Reeves and her team
Who is Racheal Reeves?
In a momentous development, Rachel Reeves, MP for Leeds West and shadow Chancellor since 2021, has been appointed as the first female Chancellor of the Exchequer since the role's inception in the 16th century. This comes 45 years after the election of the first female Prime Minister.
Starting her journey with A-levels in politics and economics, Reeves pursued philosophy, politics, and economics (PPE) at the University of Oxford. Now, as the 109th Chancellor, she marks a significant step in the history of the UK.
In a heartfelt statement on X (formerly Twitter), Reeves said: "It is the honour of my life to have been appointed Chancellor of the Exchequer. I know what responsibility it brings, and I am ready to deliver the change our economy needs to make working people in all parts of the country better off. It comes with a historic responsibility as the first woman to be appointed Chancellor. To every young girl and woman reading this, let today show that there should be no limits to your ambitions."
Reeves has shadowed three Chancellors in the last three years and faces tough decisions within her first 100 days, with her first Budget expected in September/ October. There is even talk of shortening the summer recess to allow Labour to accelerate its programme of change, as hinted by former party chair Harriet Harman.
The journey to her current position was not without its challenges. Before being elected as an MP in 2010, Reeves worked as an economist at the Bank of England and at the British Embassy in Washington DC. She completed her master’s degree at the London School of Economics in 2004 and later worked for the Bank of Scotland.
Reeves' political career began with a tough defeat in Bromley and Chislehurst in 2005 and 2006. However, persistence paid off when she was elected as the MP for Leeds West in 2010. She joined the shadow cabinet soon after, taking on roles such as shadow minister for work and pensions and shadow chief secretary to the Treasury.
Rachel Reeves is not alone in her political journey; her family is deeply rooted in politics. Her husband, Nick Joicey, serves as the second permanent secretary at DEFRA, and her sister, Ellie Reeves, is the MP for Lewisham West and East Dulwich, as well as the deputy national campaign coordinator since 2023.
Rachel Reeves' appointment is a beacon of progress, highlighting that there should be no limits to ambition for young girls and women. I look forward (hopefully) to the positive changes and economic reforms she will bring to the UK.
Big Announcement
Very often in my LinkedIn posts, I mention that I have been out and about meeting contacts but who exactly am I meeting with? The other week I attended an evening event at the Leicester Square Theatre in London, and by pure accident bumped into Simon Hancott (the estate agent I bought and sold my last property through) and his wife Claire. As you do, I got speaking with Claire who is a management accountant and so a plan to catch up for coffee was agreed upon.
Claire Hancott and I had what I describe as a frenemy chat (a friend in a similar business who does not compete in your area of expertise) where we discussed the use of a financial director in a business combined with some of the tax complications I encounter on a regular basis.
So, it was decided that this week we would produce a handful of videos discussing business and tax issues which will be uploaded to our respective YOUTUBE channels. If you have any suggestions or questions then please let me know as we are on the lookout for some great content ideas.
I hope you have enjoyed this edition of my newsletter, and found it both enjoyable and informative, if you have any suggestions or comments then please let me know it is always good to hear from you. In addition to the newsletter, I am also updating the website, so please take a look from time to time to see what is happening.
If I or the Tax Matters team can be of any assistance to you, your family or your friends then please do not hesitate to contact me at 01442 828006 or jreeves@taxmatters.tax
