As we are all probably well aware, the country has a financial black hole - some £22 billion - which, sadly, is unlikely to be found down the back of the UK's settee! With commitments already made not to increase Income Tax, VAT or National Insurance, the other taxes, and their various reliefs are likely to come in for scrutiny.

Increases in tax takings from ‘other’ taxes such as Inheritance Tax (IHT) have already been gradually increasing, without any actual ‘increase’ to rates - simply by holding allowances such as the nil rate band at long-standing levels. In the case of IHT, the current nil rate band of £325,000 has been in place since 2009 - meaning that inflation has played its role and the ‘real’ value of the allowance has decreased over the years. 

Capital Gains Tax (CGT) on the other hand has been ‘tinkered’ with over recent years, with the allowances for individuals making gains reducing from £12,300 back in tax year 22/23 to just £3,000 for this tax year 24/25. 

CGT is payable where gains are crystallised and whilst there is an argument to say CGT is a fairer tax than some of the others (as it directly taxes capital wealth and increases in such wealth), rebalancing risk within a portfolio held outside a tax-efficient structure will trigger a capital gain - upon which tax may be payable. This may be the case even though the ‘gain’ has arisen only to ensure that the portfolio does not become too overweight in one or other area and swing off its risk target.

There are some key considerations for the Government, for instance, should the present IHT reliefs for Business Relief qualifying assets still extend to investment portfolios… or should it be tightened to its original intention of supporting direct ownership in companies and the risks shareholders of private limited companies take? A careful balance between stimulating the economy through timely and available investment on the one hand and managing the reliefs available to investors would, in my view, be an area the chancellor could look at - but there are risks of knock-on negative consequences of such changes which might reduce investment inflows, reducing the much-needed economic growth.

With CGT, changing tax rates to align more closely or directly with Income Tax rates could be considered and would target those ‘with wealth’ - at least from an initial viewpoint. 

Considering whether the death of an asset owner should continue to ‘washout’ gains might also be another area that could be considered for reform.

But, as with all considerations - there will be knock-on effects. Whatever changes may lie ahead with the October budget, I very much hope that the wide range of knock-on effects of any changes are considered carefully. 

For me in particular, as a deputy managing the financial affairs of many vulnerable people who have been injured as a result of accident or negligence, perhaps consideration of the impact of any CGT changes to those recipients of awards of compensation could be factored into the system to ensure that for those whose awards of damages have already been determined can be accommodated. Can - and indeed should - this group be afforded special consideration for their taxation in the face of likely changes ahead?

I for one will be watching with interest.

For more information on inheritance and capital gains tax, please contact me.