Political Turmoil: Reactions to Rachel Reeves' Tax Increase

The political scene in Great Britain was still shaking this week from the aftermath of the ambitious tax budget intended to strengthen the country's finances. The new Chancellor of the Exchequer, Rachel Reeves, announced a fiscal policy shift in her first budget proposal: Tax increases amounting to 40 billion pounds are intended to rehabilitate the nation's finances. The focus of the measures is on companies and wealthy citizens, who will have to pay higher taxes on income, stocks, and pensions in the future. Investors were not spared either: Capital gains tax has been increased in both the lower and higher brackets. This particularly affects entrepreneurs who face a deterioration in the corporate capital allowances. Simon Gleeson from Blick Rothenberg warns of negative consequences for small business owners and the competitiveness of Great Britain. Business representatives, such as Gareth Morgan from Balance, expressed concerns that these tax increases could have a negative impact on investment activity. Notably affected are freelance professionals who work as service providers through so-called "Umbrella Companies," and whose income could be reduced by the tax changes. However, existing tax breaks embedded in the tax system will also be adjusted: From 2026, tax relief on shares listed on the Alternative Investment Market (AIM) and on agricultural and commercial property holdings will be capped. The still prevailing tax exemption on inherited pensions will be abolished from 2027, which could have significant impacts on wealth planning, as explained by Tom McPhail from The Lang Cat. Property market investors must also prepare for an increase in stamp duty for second homes. However, the additional levies are also intended to create incentives for first-time buyers, a move welcomed by groups like Generation Rent. Chris Norris from the National Residential Landlords' Association criticizes the measures as a hindrance to investors' willingness to invest in rental housing construction. Finally, the abolition of Non-Dom status is causing unrest among wealthy foreigners in Great Britain. This is to be replaced by a residency-based tax system. Significant changes in the fiscal law are being discussed by various interest groups and advisors, with a consensus emerging that wealthy individuals will rely more than ever on competent tax advice.