Autumn budget: TLT reactions

Yesterday's long awaited budget will have wide-reaching impacts across all sectors. In this article, experts from across the firm share their reactions to the contents of the famous red box.

Private wealth

Jacob Cork, partner in TLT’s Private Wealth team: “Yesterday's long-anticipated budget has included significant announcements, not all of which were expected. There are important changes to CGT, IHT and SDLT, and families with business or agricultural assets should be seeking advice urgently. CGT rate increases have not been as high as many feared, but take effect from yesterday. Those selling a business will still want to try to complete sales prior to April 2025 to secure the current rates of BADR, which may drive a boost in business sales.

“Business owners and families with farmland will need to review their estate planning, with a significant reduction in the benefits of Business Relief and Agricultural Relief from IHT from Aril 2026. These will remain valuable assets for estate planning, but families should take advice on suitable planning available for them before these reductions come into force. There is a window of opportunity to secure long-term tax benefits provided people are taking high quality advice.”

Pensions

Lizzie Stone, legal director in TLT’s pension team said: “Yesterday's budget does not contain significant pension tax changes for pension savers when taking their pension, such as a reduction to tax-free cash.  However, pension pots will now be brought into inheritance tax from April 2027, which may trigger changes to how members access and use their pension pots in their lifetime, pension scheme administrators will become liable for reporting and paying any inheritance tax due on pensions to HMRC, the details of which are due to be ironed out.

“The widely trailed proposal for the payment of employer national insurance on pension contributions will not be implemented.  However, employer’s national insurance will be increased and the threshold at which employers start paying NICs will be lowered.  We anticipate that employers may look at a combination of measures to reduce the impact on them. This might include reducing wages, capping wage increases, reviewing or implementing salary sacrifice arrangements or reducing pension contributions.  Implementing such changes may require a review of contractual arrangements and consultation with employees in accordance with legal requirements. The move to limit fire and re-hire where employees don’t agree to a variation to their contract may have an impact on any potential changes, depending on timing.

“Employers will also need to pay close attention to the proposal to tackle non-compliance in the Umbrella Companies industry which could leave employers liable for tax where they use non-compliant umbrella companies.”

Tax

Mark Braude, partner in TLT’s tax team commented: “Yesterday’s budget – one of the most closely watched budgets in recent years – has put an end to months of speculation about changes to the capital gains tax rules. Inevitably, business owners will be racing to calculate the financial impact of the CGT rate changes on a future sale.

“The confirmed immediate increase in the rate of capital gains tax was accompanied by a change in the rates available when business asset disposal relief is claimed. As the latter change will be staggered until April 2026, business owners may look to sell their assets before the changes to the relief come into effect. By acting ahead of April 2025, business owners will be in a position to take advantage of current tax rates and favourable market conditions.

“However, navigating the sale of a business can be complex and decisions to sell should not be driven by tax alone. and we encourage business owners to not act rashly in light of yesterday’s announcements.

“Before fast-tracking sales, we would advise business owners to think carefully about the purpose of the sale. If selling for legacy and inheritance purposes, there are alternative ways to exit, or partially exit, a business that doesn’t involve a trade sale. For example, the Employee Ownership Trust model has increased in popularity in recent years, allowing business owners to protect the legacy of their business whilst also rewarding loyal employees for their hard work and dedication.”

Housing

David Meecham, partner in law firm TLT’s housing and regeneration team said: “This is a real move towards the concept of “housing that is affordable” as opposed to “affordable housing”, marking an exciting turning point for the future delivery of housing and outlining significant opportunities for the sector. The increase in investment of £5bn to support the delivery of the government’s housing plans and the increase of funding into the Affordable Housing Programme to £3.1bn announced yesterday, will be a welcome influx of capital and resource into the housing system, also whilst also incentivising council’s to deliver more council housing but protecting any longstanding tenant’s ability to acquire the freehold of their home if they want to.

“The Housing Strategy due to be published in the spring will further cement Labour’s social housing ambitions, providing a clear pathway for delivery in the coming years. We look forward to seeing the details of the strategy in due course and encourage housing authorities and local councils to keep up-to-date with developments.”

Retail

Perran Jervis, partner and head of TLT’s retail and consumer goods sector said: “The hike in the National Living Wage is without doubt a positive development for many shop workers, and may help entice younger workers to seek employment in the retail sector. However, the hike in salary costs, on top of a rise in employers national insurance contributions, will also increase pressure on retail employers who are already tackling many other cost burdens including rising supply chain costs in fuel and freight and business rates on the High Street.

“Retailers will not want to pass on cost rises to consumers with squeezed spending at the consumer level and tight competition for market-share, however they may be forced to do so. This means retailers will need to look again at how they can increase efficiencies in areas such as the supply chain and stock control, potentially by leveraging the benefits of AI technology, or investing in new product development for which customers will still pay a premium and to maintain an edge in the market. Alternatively, further rationalisation of physical stores and bolstering online-sales may be required.”

Leisure, food and drink 

Julia Lucas, partner and head of TLT’s leisure, food and drink sector said: “Hospitality businesses will be breathing a sigh of relief that the hospitality sector will benefit from lower business rates involving 40% relief in 2025 and 2026, offsetting some of the other increases in costs announced in yesterday’s budget.

“For example, the hike in the national minimum wage is without a doubt a win for employees who are facing a higher cost of living, alongside other socio-economic pressures and may attract young employees to seek employment in the sector.

“For employers in the hospitality sector however, the increase in minimum wages, coupled with the increase in national insurance contributions that employers pay, alongside the cost of the Employment Rights Bill introduced earlier this month, will cause a blow to an industry that is already grappling with staff shortages, rising costs and business viability.

“It’s of vital importance that yesterday’s announcements be coupled with targeted measures to support hospitality businesses. We encourage all businesses in the sector to keep a close eye on updates following yesterday’s announcements.”

Future energy

Maria Connolly, partner and head of TLT's cross-discipline future energy team said: “The National Wealth Fund is a cornerstone of the government’s election commitment to make Britain a clean energy superpower, so there was little doubt it would feature prominently in the Chancellor’s first Budget. And on paper, a promise to catalyse £70bn in private investment does not disappoint. Nor does £3.9 billion for the first carbon capture and storage clusters, and additional support for the first round of electrolytic hydrogen production contracts with 11 green hydrogen producers.

“There is still some way to go before money committed on paper yesterday translates to spades in the ground – or indeed seabed. Private investors and industry will eagerly await further details of how the NWF capital will be allocated. Fortunately, there is no shortage of private capital looking at the UK, with its capabilities in clean energy, enormous geographical potential, and its ambitious targets for reaching net zero, and calculating the significant opportunities is presents, once the right support is in place.

“Current barriers to investment, such as around viability, demand certainty, and value chain readiness, are real but far from insurmountable, and the government and NWF has a clear strategy to address them. It is right that the Budget materials emphasise the importance of reform – for example to planning rules and grid connections – to accompany this new wave capital investment. Such reforms have the potential to unlock project viability to a very significant extent”.