What might we see in the Autumn budget?

Tax compliance. More compliance officers and new processes are part of extra tax avoidance measures. The government says it will invest £555million to help HMRC collect an additional £5billion a year. The aim is to fill the tax gap, which is the difference between what’s owed and what’s paid. HMRC says small businesses are responsible for the largest part of this difference. To raise more revenue without increasing tax rates small businesses can probably expect some extra rules. 

 

Residence-based tax. It’s expected that changes to the tax status of non-domiciled or ‘non-dom’ UK residents will take effect from April 2025. These changes were announced in the Spring Budget by the previous government. They affect tax on Foreign Income and Gains (FIG) for people newly arrived in the UK. They will apply for four years, affecting people who haven’t been resident in the UK in the previous 10 years. The budget is also expected to abolish protection for assets put into overseas trusts before people move to the UK. 

 

Furnished Holiday Letting (FHL). Changes from April 2025 for FHLs will affect income tax, capital gains tax and corporation tax. Special tax allowances for FHL owners will go, so costs will probably increase. New claims for capital allowances will stop, along with deductions for interest on loans. If you own FHLs you’ll no longer have the option to use relevant earnings for your pension contributions either. Special capital gains tax (CGT) rates and reliefs will also stop, increasing the tax payable on property sales and transfers. You could consider transferring your property early as part of your inheritance planning. It’s also worth considering moving from holiday lets to long-term lets as a more effective financial option. 

 

Fuel duty. The ‘fuel duty escalator’ was intended to encourage more people to use low or zero CO2 vehicles. It was suspended in 2011. The new government has said it is committed to the ban on selling new combustion engine cars by 2030. As a result, we might see the fuel duty escalator reintroduced to increase pressure to move to electric vehicles. Benefit in kind (BIK) rates for company cars might also increase. 

 

R&D tax relief. Changes aren’t expected to the current arrangements for R&D tax relief and the Patent Box. However, the commitment to reduce fraudulent and incorrect claims remains. You’ll need to make fully compliant claims to avoid delays and extra administration. 

 

Budget day is also likely to see publication of a ‘roadmap’ for business taxes. This might include a freeze on the top level of corporation tax at 25% and continuing full expensing capital allowances. 

 

A review of business rates is expected but we haven’t yet heard details of the process. Another unknown is whether Making Tax Digital for corporation tax is included in the roadmap. 

 

Other possibilities include an income tax relief threshold for pension contributions and increases to CGT. 

 

We’ll watch developments over the next few weeks with interest.