Spencer West Partners react to Autumn Budget
Chancellor Rachel Reeves promised to “fix the foundations” of the economy and repair the public finances in the Autumn Budget.
The Chancellor introduced a raft of measures, headlined by a raise in taxes by £40 billion to accelerate the apparent repair and a boost in spending across welfare and housing.
Spencer West Partners shared their insights with various media outlets, providing an initial outlook on the implications of the various changes across business rates, corporate tax, the abolition of the non-dom regime and what an increase in National Insurance Contributions for employers will mean for businesses.
Commercial Property Partner Michael Shapiro commented on the Government’s pledge to deliver a fairer business rates system through permanently lower business rates multipliers for retail, hospitality and leisure (RHL) properties from 2026-27. The Budget also provides £1.9 billion of support to small businesses and the high street in 2025-26 by freezing the small business multiplier and providing 40% relief on bills for RHL properties, up to a £110,000 cash cap.
“For those in the retail and hospitality sectors, the cost of business rates is becoming prohibitive, and this is one of the major causes of so many high street units and pubs being empty. Anything that is giving support is welcomed. Whilst the business rates system needs a complete overhaul, this is at least a positive start,” Michael said.
Read Michael’s comments in Completely Retail, Better Retailing, BE News, The Grocer, and The Industry Fashion.
International Corporate Tax Partner Mark Tan analysed the Budget from a corporate and related tax perspective, as the Chancellor walked the tightrope of raising revenue and ensuring the UK remained a viable option for investment.
“Overall, the corporate tax measures in this Budget reflect a careful balance between securing revenue and maintaining the UK’s competitiveness. However, the increased CGT and NIC rates introduce added costs for businesses and investors, potentially impacting decisions on expansion, hiring, and long-term investment. While I appreciate the government’s aim for fiscal responsibility and tax fairness, this heavier tax burden on corporate profits and capital gains may risk dampening investment appeal, especially for high-growth sectors like technology and innovation that depend on external financing.
Whilst the Corporate Tax Roadmap may sound like a grand plan, much of it reiterates existing measures, confirming the continuity of policies that support stability in the tax system. The last two points—expanded access to Advance Pricing Agreements (APAs) and the proposed Advance Tax Certainty for major projects—stand out as the most forward-looking aspects of the roadmap. Their impact will depend on the government’s follow-through, and until we see substantive steps, these ideas may risk remaining more aspiration than actionable policy.”
Read Mark’s full article on the implications here: Autumn Budget 2024: Corporate and Related Tax Implications
Corporate Partner and Strategic Lead on Venture Capital, Technology and International M&A, James Klein, turned his eye towards the increase of Capital Gains Tax (CGT) on carried interest and its implications for private equity managers and the sector as a whole.
“The Capital Gains Tax (CGT) rate on carried interest will indeed be increasing from 28% to 32% from April 2025 from 28% to 32% (which is envisaged to be an interim step) as the Government seeks in its view to better reflect the economic characteristics and the associated level of risk being assumed by fund managers who receive it. Additional reforms are planned from April 2026 in order for the specific rules for carried interest are “simpler fairer and better targeted”. The advantage of this delay before additional reforms are introduced allows for some form of consultation during the interim period.
The change will of course have varying levels of impact on private equity managers who typically received carried interest as part of their compensation although the reforms are not expected to have a macroeconomic impact per se – there will be wide-ranging views on the change – some may find it to be a fairer rate, helping to move towards a more stable and perhaps more predictable tax regime here in the UK and more accurately reflecting the economic interests of carried interest and perhaps also arguing that it aligns the UK with other countries.
Certainly, the rise could have been larger – the sector is crucial to UK business and its need for private investment / growth capital and larger rises could have driven managers overseas. Others will undoubtedly reflect on the impact on fund managers and those working in the investment management industry and the need for those individuals (some 3,000+ in the UK) to bear the higher tax liability on their carried interest payments as well as the fact that the higher rate might deter new investments and delay new ones which would negatively impact investment into scaling UK businesses.”
Read James’ comments in The Drawdown, Retail Banker International, and Alternative Credit Investor.
One of the most highly publicised measures announced in the Budget was the abolition of the non-dom regime from April 2025, with the concept of domicile status from the tax system replaced with a residence-based regime.
Private Wealth Partner Sangeeta Rabadia explained the changes were as expected, but understanding the full impact is still some time away:
“The announcement was as expected. Ms Reeves announced that she will be abolishing the non dom tax regime. Unfortunately, she did not go much further that what she has before. Those affected will unfortunately, be faced with further waiting to see what this means for them. What is this new residence-based scheme that will replace the current regime? How will this be implemented, will it be all in April, will there be a tiered approach? How will that impact those paying tax under the current regime?
Whilst the Budget was much awaited, there is still a longer wait for those affected. As practitioners we are no more in a position to advice our clients as we were yesterday.”
You can read Sangeeta’s comments in CityAM and Wealth Investment News.
Private Client Partner Stephen Abletshauser questioned the incentives for those coming to the UK to invest:
“There was positive news in Labour extending the Temporary Repatriation Relief to 3 years however the other news is negative or neutral. The backdrop of a £40 billion tax hiking environment is especially unwelcome.
Among the issues we see, the regime to replace non doms, a regime which had lasted hundreds of years, will only last 4 years which will discourage many who will be considering moving their families to the UK.
A more material exemption duration would encourage a more permanent relocation. Competitive regimes in Europe for new arrivers last for 10-15 years typically and internationally (Singapore, Hong Kong, UAE, many Caribbean jurisdictions, for example) are unlimited. What is the incentive now to come to the UK and invest in its society and economy to stimulate growth for the long term?
As Brexit and recent political turmoil have rocked the UK economically, and more importantly perhaps in terms of perception, we would have hoped for more meaningful and less meretricious tinkering with tax policy to attract the wealthy who will help grow the UK out of its current plight.”
Personal Tax & Global Mobility Partner Bina Gayadien said:
“What is clear is that the announcements are aimed to reshape the tax position for non-domiciled taxpayers. There are elements of simplifying and extending the relief, especially on employment income. Under the new system the relief will apply for up to four years, an extension from the current three-year period- and will apply whether the income is retained abroad or transferred to a UK account. A new limit will be brought in on the amount of the relief that can be claimed. Additionally, the reforms offer a temporary repatriation facility to encourage individuals to remit their foreign income and gains to the UK and pay a reduced tax rate.
The proposed changes will have a substantial impact on individuals with long-term UK residence who have previously used their domicile status to protect overseas income and gains. Under the new regulations, these individuals will be fully subject to UK taxation on their worldwide income, aligning with the government’s commitment to greater tax transparency and fairness.
Despite these reforms, the UK continues to offer an attractive tax regime for international professionals and expatriates when compared to other European countries with special tax regimes for employees.”
Private Client Partner Hilesh Chavda commented on the timings for those coming to the UK and being subject to worldwide income and capital gains tax:
“No surprise in the changes to the non dom regime announced. Residence will determine UK tax liability and domicile will have no place with regards to IHT. Those coming to the UK will be subject to worldwide income and capital gains tax after 4 years of residence under the new foreign income and gains regime which will replace the remittance basis of taxation.
It is a mixed bag regarding the transitional provisions. No 50% discount on foreign income in 2025-26 but the Temporary Repatriation Facility is extended from two to three years and there is a rebasing to 5 April 2017 for CGT on foreign assets by current remittance basis users. It is less clear what the government mean by the “ending the use of offshore trusts to shelter assets from IHT”. Will this mean certain trusts established before the new rules come in will be subject to IHT, as Labour had indicated, or will the IHT status be preserved.
As I keep saying, the devil will be in the detail and we need more detail to see how it will really impact international individuals. We wait with baited breath for further announcements.”
Rachel Reeves’ Budget included a crackdown on fraud and non-compliance as part of its management of the R&D tax reliefs. Fraud and Financial Crime Partner Gerallt Owen said:
“This budget signals a firm stance against R &D tax relief fraud, with HMRC stepping up monitoring efforts to protect the system’s integrity. Key to this initiative is HMRC’s responsibility to deliver clearer, practical guidance for claimants, ensuring legitimate businesses are not hindered by ambiguous or shifting criteria. By reinforcing oversight while providing straightforward guidance, HMRC can achieve an effective balance: deterring misuse and fraud without penalizing compliant innovators and ensuring that the rules remain stable for businesses driving genuine research and development.”
Restructuring, Reorganisation and Insolvency Partner Suzanne Brooker commented on the changes to the minimum wage and increase to employers’ increase in National Insurance Contributions.
“The proposals to raise the minimum wage and to increase the employer’s NIC will place a further financial burden on UK business against a backdrop of increasing costs of borrowing (due the interest rate rises already in play) and inflationary rises in supply chains already in place.
These additional employment liabilities will undoubtedly result in operational reductions to right size financial performance or a further increase in the costs of products or services as costs are passed on which in turn affects growth plans.”
You can read Suzanne’s comments in HR Review, inews.co.uk, International Tax Review and smallbusiness.co.uk.
