The latest UK GDP figures indicate that the first assumption may not be entirely accurate, while the second seems to be laying the foundation for potentially unpopular tax increases, expected to be announced in the upcoming October Budget to strengthen public finances.
Labour has already begun tightening spending, with various allowances either being eliminated or placed under review. This has sparked widespread speculation about what could be targeted next, with inheritance tax (IHT) frequently mentioned as a likely area for potential changes.
Some are specifically suggesting that business relief on AIM shares should be abolished to help increase revenue. Currently, if you hold investments in qualifying AIM companies for at least two years before your death, those assets can be passed on free from inheritance tax (IHT).
The Institute for Fiscal Studies estimates that removing this relief could generate £1.1 billion in the current tax year, rising to £1.6 billion by the end of the decade. While this isn’t a significant sum and won’t make a major dent in the chancellor’s £22 billion budget shortfall, it remains a notable amount.
