UK Autumn Budget 2024

Black holes and goalposts but no rocket boosters

Today’s Budget was billed as the most consequential for many years – and in many ways it was: a stated £40bn of additional taxes, the same again for additional borrowing. All delivered without great disturbance to the financial markets, notably the gilt market. But while the “black hole” may have been filled, it appears to have been done by moving the goalposts on the ‘fiscal rule’ to allow that greater borrowing rather than by applying the hoped-for rocket boosters to the UK growth trajectory. More ‘damp squib’ than Titan.

From a tax perspective, the publication of the Corporate Tax Roadmap offered the government a chance to demonstrate its commitment to economic (and tax) stability for businesses. This includes the promise of only one fiscal event per year – though many of us have heard such promises before and not seen them adhered to. Overall, though, the fact that there is little to surprise the reader in the Roadmap may be seen as one of its virtues.

Indeed, this was a Budget of very few tax surprises – much of this down to the fact that many of the tax changes had been leaked in advance. The increase in the “tax on jobs” may seem to run counter to a commitment to growth, but the Labour Party triple lock on income tax, VAT and corporation tax (plus employee NICs) left them with little choice to look elsewhere to raise taxes to fill the controversial “black hole”.

Increases in CGT were relatively modest compared to initial speculation and changes to the taxation of carried interest appear to have been substantially watered down from what might have been expected from earlier rhetoric, although all will change again in 2026. Other areas of the tax system also survived relatively unscathed, including business asset disposal relief (formerly entrepreneurs’ relief) and IHT (outside the non-dom trust related changes). There was, however, no watering down or delays on the commitment to add VAT to private school fees.

The commitment to modernise and expand HMRC continues apace. Additional staff and additional modern IT and data systems are expected to produce a substantial return on investment, with the usual raft of anti-avoidance and anti-evasion measures included in the Budget.

But back to the markets. Any initial enthusiasm in financial markets during the Budget speech waned when the details and their devils were finally published. But that may count as a positive result compared to the so-called mini-budget of 2022. A new and economically more sensible fiscal rule created the headroom for an additional £40bn of borrowing while other measures look to raise the same again in additional tax revenue. But none of it appears to have shifted the dial on the UK's growth trajectory - and those increases have left precious little wriggle room in the event of any economic disturbances. One such headwind could begin blowing as early as next week and gather pace in 2025 if the US presidential election brings another round of protectionism and trade war.

For our full Budget coverage, covering both the main business tax announcements and our economic analysis see the links on the right and below.