Auriens Chief Financial Officer Reflects on the 2024 Budget

I am sure many of you watched with interest as Rachel Reeves delivered her first budget; I have picked out a few headlines and included a few musings.

When she finally got to the meat, after the normal potshots at the outgoing crew, it appeared a very traditional Labour budget hidden under the banner of “no tax rises for working people”. However, I have yet to see a definition of a ‘working person’.
 
I do fear the hit to employers via the National Insurance hike/thresholds will simply have to be paid elsewhere and this along with the increases in capital gains tax and changes to carried interest rules will stifle entrepreneurs and ultimately limit growth.
 
Employers are taking the brunt of the £40bn tax rises, at an estimated £25bn. Only SMEs with less than c12 employees will escape the change in the Employer’s NI threshold from £9,100 to £5,000.
 
Based on a member of staff on £30k salary p.a., the increase for employer NI will be c£1.2k +4% against their salary. This will surely influence pay rise considerations and therefore hit ‘working people’.

‘FORTUNE’ – leads with the attention-grabbing headline “The U.K. joins Europe in targeting the superrich with a fresh crackdown on foreign wealth, capital gains, and private jets”

Read the Fortune article in full.

However, the rise in capital gains (at the higher level) from 20% to 24% is below what I was personally expecting and those regularly using a private jet are probably not too concerned about an extra £500 per long-haul flight.
 
The shake-up of the 200-year-old non-dom tax regulations was announced, and this will inevitably be forefront in the minds of the c73,000 that benefited from non-dom status in 2023. Ripples must be expected through the prime residential real estate sector. (Details of any transition period and the ‘residence-based’ future scheme were not provided).
 
Though it should be noted that commentators believe the majority of those non-doms that were planning to leave the UK have already done so in expectation of the announcement, perhaps the fallout has already hit. 

 
‘PROFESSIONAL ADVISOR’ -“Business owners hit with surprise tax triple whammy”

“Chancellor Rachel Reeves revealed significant changes to Capital Gains Tax (CGT), Inheritance Tax (IHT) and employers' National Insurance Contributions (NIC), that have left business owners "feeling the pain", according to one wealth manager.”

Read the Professional Adviser article in full.
 
Business owners including family-owned farms will be carefully examining the implications of their plans for any divestment alongside the need to consider inheritance tax planning.

 
‘REUTERS’ – “UK's Reeves bets big on tax-and-spend to reset economy”

“Reeves' first budget marks a huge gamble that she can quickly rebuild the country with the tens of billions of pounds she has raised in taxes and withstand the anger of businesses charged with funding it. 
 
The Institute of Directors said most companies would struggle to look beyond the tax hikes. "Business leaders can only hope that this is a big bang now, to wipe the slate clean and that there will be no further shocks of this magnitude in the lifetime of this parliament, enabling business to plan with more confidence," its policy director Roger Barker said.”

Read the Reuters article in full.

The budget will enable government spending to increase by almost £70 billion a year - or 2% of economic output - over the next five years.
 
Let’s hope the growth forecasted off the back of this budget materialises and that the spending on infrastructure and services is delivered at speed and with efficiency, I fear history suggests otherwise.

On a positive note:

“the bond market reaction looks remarkably muted, at least by Trussonomics standards. Yields ended the day at levels last seen shortly before the election” - 'INVESTORS CHRONICLE'

 
Read the Investors Chronicle article in full.

From the perspective of Auriens, with the general election and this first Labour budget behind us, this removes the uncertainty that has been stifling the super prime London real estate market.
 
We look forward to seeing the Auriens Chelsea community continue to thrive as new residents move in over the coming months. This period of change brings fresh possibilities, and we're excited to see our vision for Auriens continue to take shape in 2024 and beyond.