23 November 2023

In practice the 2023 Autumn Statement was very much focused on businesses and earned income (with the most eye-catching changes to personal taxation being to national insurance).

The measures of most direct relevance to high-net-worth individuals and their structures were arguably:

  1. The extension of the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) regimes to 2035; and
  2. A commitment to raise a further £5bn over the next five years by enacting further measures to tackle the “tax gap”. Well advised clients will already be paying what they owe but it is possible this could signal a further shift in how HMRC approaches compliance checks and enquiries.

The certainty given to users of EIS and VCT products is welcome. These regimes were both due to end in 2025 and, whilst Mr Hunt had previously stated that he intended to extend them, plenty of investors will be relieved to see this being done in good time.

The Autumn Statement documents then refer to a package of measures aimed at reducing the tax gap, of which the most interesting for private clients are:

  • Tougher consequences for the promotors of tax avoidance: and
  • Changes to how HMRC collects data from taxpayers.

However, in our view neither of these is likely to result in noticeable changes for most clients. Reputable advisers already go to great lengths to steer clear of anything which might constitute the promotion of tax avoidance and it appears unlikely that the reporting requirements for taxpayers will have a material impact for most people.

Perhaps what is more important is what did not change.

There was no mention of inheritance tax in the end, despite a flurry of speculation on this topic last week. Given that the Chancellor has now committed much of the “headroom” he had for tax cuts there must now be questions as to whether we are likely to see any changes to inheritance tax ahead of the next election. On the one hand, it is strongly disliked by much of the population (YouGov polling in October 2023 indicated that more than 50% of people thought it was either “unfair” or “very unfair”[1]). On the other, fewer than 5% of estates pay it[2] and any reduction risks being criticised as regressive. It is perhaps for this reason, and the £7bn or so that IHT raises for the treasury each year, that its demise has often been predicted but has yet to come to pass. It was back in 1995 that John Major said “When it is appropriate and we can afford to do so, I wish to abolish both capital gains tax and inheritance tax”. Apparently we are not there yet.

There was also a conspicuous silence on the taxation of non-domiciliaries (very broadly, those who are tax resident in the UK but who do not consider the UK their permanent home). Labour have repeatedly promised to abolish the non-dom regime and Rachel Reeves stated last year that they would bring the UK’s rules into line with “other major economies like France, Germany and Canada” all of which offer much more limited relief for expatriates (if any). There had been some thought that the Conservatives might attempt to spike Labour’s guns on this topic. Now there will not be any changes until the budget next year at the earliest. The message to non-doms remains “consider your planning options now”.

All in all this was very much a “wait and see” package of measures so far as they relate to HNW clients and their structures. There is likely to be a great deal more speculation as to how UK tax laws will change as we get closer to an election next year and we will continue to monitor the various parties’ policy statements and their possible implications. 

[1]How fair is inheritance tax? (yougov.co.uk)

[2]Inheritance Tax statistics: commentary - GOV.UK (www.gov.uk)

Key contact

Headshot of Edward Hayes

Edward Hayes Director

  • Private Client Services
  • Private Wealth
  • Tax

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