Alex Smith, Senior Accounts Manager at Shaw Gibbs, reflects on yesterday’s speech from the Chancellor.

Yesterday, the Labour Chancellor Rachel Reeves delivered her first major speech since the election. In this she announced her: ‘no time to waste’ attitude in boosting economic growth, her commitment to keep and deliver on the Labour manifesto pledges and upcoming changes to the country’s planning regimes.

Though the Chancellor revealed plans to present a speech to parliament before the summer recess, she highlighted the fact that this would not be a budget speech. Indeed, this would be consistent with the new government’s budgets being reviewed by the Office for Budget Responsibility (OBR), which is reported to take weeks, and hence expected later this autumn.

As expected, the Chancellor repeated her commitments that the government will not increase rates of National Insurance Contributions (NICs), basic, higher or additional rates of Income Tax, or VAT. This means that the main rate of employee NIC’s will stay 8%, as well as Income Tax at 20% / 40%/ 45% (different rates apply in Scotland), and the standard rate of VAT at 20%. This of course ignored the government’s plan to levy VAT on private school fees, which our Associate Director, Leo Donovan, recently wrote about: VAT and Private School Fees – Lessons to Learn(Linkedin.com). Despite previously stating that there will be no increase in Corporation Tax, there was no mention of this or Capital Gains (CGT) or Inheritance Tax (IHT), and so whilst we assume these are all to stay at current rates, there is of course no guarantee.

Also mentioned were plans to review the greenbelt boundaries, as well as reform the planning sector by unlocking development on the ‘Grey belt’ – a new term the government has yet to define. However, the aim appears to allow development on sites otherwise not being used, which would also feed into wider plans to eventually build 1.5m new homes in the next five years. This would also now be a formal government target. Importantly for landlords, there seem to be no signs of intentions to implement rent controls, or reforms to mortgage interest deductions. The manifesto did however state that the rate of Stamp Duty Land Tax for residential properties purchased by overseas investors would increase by 1%, however we have not heard further about this since the election.

In closing, the Chancellor revealed that she has commissioned economic analysis work by the Treasury, and that a decade of national renewal has just begun. “Britain is open for business,” she said.

Our Thoughts:

We hope to soon hear more on these topics, as well as the new system for business rates and so the roadmap for future business taxes – both promised in the Labour party manifesto. We also expect to eventually hear specifics around IHT and CGT, for example Business Asset Disposal Relief (previously Entrepreneur’s Relief), which is still currently 10% for the first £1m of qualifying disposals.

In addition, we also recently released information on the previous government’s latest updates and plans around High-Income Child Benefit, as well as the UK Company Size Thresholds, and the New Minimum Wage and Living Wage, and are now keenly waiting for any indications on how these might be impacted for the 2025/26 tax year under the new government.

Whether you are an individual taxpayer, or a company director or shareholder, Shaw Gibbs are available to discuss your needs. If you have any questions regarding the above, and/ or your specific requirements, please contact Alex Smith or the team at Shaw Gibbs. We will be glad to assist you.