How will Labour’s budget in October affect me?
Paula Veysey-Smith • 30 September 2024
On the 30th October 2024 the Government will deliver the first Labour budget for over a decade. More than that, it will be the first budget ever to be delivered by a woman, Chancellor Rachel Reeves.
So, what can we, the tax payer, expect? Especially after she has already told the BBC that it would involve some “difficult decisions” on tax, spending and benefits aimed at addressing the significant public finance shortfall of £22 billion.
No financial crystal balls currently exist but if they did, we can be fairly certain they would foretell the following!
- Pension Tax Relief Changes: One of the more contentious proposals is to introduce a flat 30% pension tax relief rate. This change would primarily affect higher earners, increasing their effective tax burden while providing a boost for basic-rate taxpayers. It's estimated that this could raise around £3 billion annually.
- Inheritance Tax Reforms: Labour has already indicated its intentions to close loopholes in the inheritance tax system, potentially making reliefs less generous. Ending certain exemptions, like those for offshore trusts and agricultural properties, would also generate significant much needed additional revenue.
- Council Tax Revisions: There is a call for council tax reform, addressing its outdated valuation system from 1991. This could lead to more equitable taxation based on current property values but would almost certainly see larger properties attracting higher council tax bills.
- Changes to Capital Gains Tax: Although Labour has committed to not increasing income tax or national insurance rates, it has left the door open regarding capital gains tax. There's speculation about raising rates or changing how gains are taxed upon death and this is almost certainly an area of tax that will feature in the budget.
- VAT on Private Schools: Labour plans to end the VAT exemption for private schools, which could begin to be implemented in the 2025-26 school year. This policy has already been announced causing much criticism and it is still unclear how much impact this will have on the budget black hole.
- Increased Business Taxes: With the recent increase in Corporation Tax to 25% it is unlikely that any major changes will be made this time around. However, there will likely be a roadmap for business taxes, with an emphasis on reducing tax avoidance and increasing compliance efforts.
- Windfall Tax on Energy Companies: A long anticipated measure, Labour is expected to extend the current windfall tax on oil and gas profits, increasing the levy by three percentage points.
Conclusions
With the already announced focus on Wealth Taxes the above measures would certainly be in line with this policy. It also falls in line with Keir Starmer’s stance that those with the broadest shoulders should bear the heavier burden.
Labour's approach is framed around repairing what they characterise as financial mismanagement by the previous administration. As they prepare for this budget, both Rachel Reeves and Keir Starmer have indicated that the measures could be “painful” but necessary for long-term fiscal health.
There will be many more developments and updated analysis before the budget day which, at M:Power, we will be keeping a close eye on. We will also publish the major headlines from the budget, with a focus on what it means for small businesses in the UK, so please look out for that.
HMRC has increased the Approved Mileage Allowance Payment rate from 45p to 55p per mile for the first time in 15 years. Find out what the new rates mean for employees, directors and self-employed individuals from 6 April 2026.
You've made your goal specific. Now how do you know you're actually getting there? The answer is in the M. "The more you can define your goals, the more likely you are to achieve them." Last time we looked at S for Specific — turning vague wishes like "I want to get fit" into something concrete and actionable. If you missed it, go back and start there, because everything builds on that foundation. Now we move to M for Measurable. And this one is just as important, because a goal without a measure is still just a wish.
Your New Year’s resolutions haven’t failed, they just need a sharper edge. Here's how one simple shift can change everything. “We make New Year's resolutions — let's call them goals. But they can be a bit vague. The way to make them happen is to actually define them better.” It's that time of year when those bold January intentions have quietly faded into the background. "Get fit." "Lose weight." "Grow my business." Sound familiar? You're not alone — and more importantly, you haven't failed. Your resolutions just need a better framework.
HMRC’s new system Making Tax Digital for Income Tax Self-Assessment has now arrived! This isn’t just a regulatory update. It’s a shift in how your records are kept, how often you report, and what you will need to do throughout the year. What’s changing for you: Under MTD for Income Tax, if you’re a sole trader or landlord within scope: You’ll need to keep digital records Quarterly updates will need to be digitally submitted to HMRC An End of Period Statement (EOPS) will need to filed A Final Declaration will be needed to finalise your tax position for the year In short: instead of one annual deadline, your tax reporting becomes a year-round process. Why using compliant bookkeeping software is now essential? To meet MTD requirements, HMRC requires fully digital record keeping and submissions . Manual spreadsheets alone are no longer sufficient You’ll need to use MTD-compliant bookkeeping software Sending your accountant paper records or incomplete information will cause delays The upside (it’s not just compliance) While MTD is mandatory, it also brings real benefits: Clear visibility of your tax position throughout the year Better cash flow planning Fewer surprises at year-end What support do you need to navigate this new system? The support of qualified accounting professionals is now more necessary than ever. We don’t expect you to navigate this alone and here’s how MPower Accounting can ensure that you not only comply with, but thrive under, this new reporting requirement. We’ll help you choose and set up the right software We work with trusted platforms such as Xero, QuickBooks, FreeAgent and others. We’ll recommend what fits your business best and get everything set up correctly. We’ll ensure you stay compliant Review your records regularly Submit your quarterly updates accurately and on time Handle all year-end submissions We’ll take the stress off your shoulders With the right system in place: Your records stay up to date automatically We can spot issues early You avoid last-minute pressure and surprises All we’ll need from you to make MTD work smoothly, is access to your chosen bookkeeping software, regular uploaded receipts so we can keep records current and a little of your time when there are questions. The more up-to-date your records are, the more value and proactive advice, we can provide. Your role is simple but important. Letting us take the strain of compliance will save you time and cause significantly less stress, enabling you to focus on what is important, that is running your business successfully. Next steps If you haven’t already: Speak to us about getting set up on MTD-compliant software Let us review your current bookkeeping process Make sure you’re ready for quarterly reporting
