What to Look Out for in the UK’s October Budget: Key Highlights

The UK government’s autumn budget is always highly anticipated, especially during times of economic uncertainty or significant policy changes. With October marking another important financial statement, individuals, businesses, and investors are keen to know how the Chancellor of the Exchequer plans to address the country’s economic challenges and opportunities.

Here’s a breakdown of what to look out for in the UK’s October Budget and what it could mean for you:

1. Cost of Living Crisis Support

The cost of living has been a key issue in the UK, with inflation rates still elevated and energy prices unpredictable. Many are hoping for further government intervention to help households cope with rising expenses. Measures to watch for include:

• Energy Bill Support: After temporary schemes in 2023, will the government extend or introduce new help for households struggling with high energy prices?
• Fuel Duty: There has been much debate over whether fuel duty should remain frozen or see an increase, especially as the government pushes towards greener initiatives.
• Food Price Inflation: With food prices still stubbornly high, any targeted measures to bring relief to supermarket shelves or support food banks may be a key point of interest.

2. Tax Reforms

Tax changes are always one of the most closely monitored elements of any budget. Potential areas of reform in the October Budget include:

• Income Tax and National Insurance: Will thresholds remain frozen, or could there be cuts or rises? Frozen tax bands have led to ‘fiscal drag,’ pushing many into higher tax brackets due to inflation. The Chancellor might address this to ease pressure on middle-income earners.
• Corporation Tax: Following the recent rise in corporation tax rates to 25%, there’s speculation that adjustments may be made to boost small businesses and encourage growth.
• Capital Gains Tax (CGT): Investors and landlords will be keen to know whether CGT rates will be adjusted as part of broader reforms to personal taxation.

3. Public Sector Pay and Investment

Public sector pay disputes have been a recurring issue over the past year, with strikes from NHS workers, teachers, and other public servants over pay conditions.

• Pay Settlements: Will there be funding for higher public sector pay settlements, or will the government maintain its stance on fiscal discipline?
• Infrastructure Investments: Keep an eye on potential announcements regarding long-term infrastructure projects. Plans for schools, hospitals, and transportation could be highlighted as part of a strategy to modernise the UK’s public services.

4. Housing Market and Property Taxes

The UK housing market has been in the spotlight due to high mortgage rates and concerns about affordability. Possible changes related to property taxes could have significant impacts on homeowners, buyers, and landlords.

• Stamp Duty: There may be changes to the stamp duty thresholds or exemptions aimed at making homeownership more accessible.
• First-Time Buyer Support: Watch for potential schemes or adjustments to Help to Buy and similar initiatives.
• Landlord Regulation: With the rise in rental prices and the debate over tenant protection, there could be new regulations affecting landlords, especially regarding tax treatment and rental market reforms.

5. Green Energy and Net Zero Policies

With the government committed to the UK’s 2050 net-zero target, environmental measures will likely feature prominently in the October Budget.

• Incentives for Green Investments: We may see new tax incentives for households and businesses to invest in energy efficiency, such as solar panels or heat pumps.
• Transitioning from Fossil Fuels: Expect funding or initiatives focused on reducing the UK’s reliance on fossil fuels, including support for electric vehicle (EV) infrastructure, renewable energy, and alternative fuels.
• Carbon Pricing: Reforms or updates to carbon pricing mechanisms could emerge, impacting industries with large carbon footprints.

6. Business Growth and Innovation

Economic growth and productivity remain priorities for the government, particularly as it navigates a post-Brexit economy. The October Budget could include policies designed to foster innovation and boost business confidence.

• R&D Investment: A push for increased Research & Development tax credits and incentives for tech startups may be a central feature, as the UK aims to become a global leader in technology and innovation.
• SME Support: Small and medium-sized enterprises (SMEs) could see specific tax breaks or funding programs aimed at supporting their growth.
• Skills and Training: Expect new funding or initiatives aimed at closing the skills gap, particularly in areas like digital and green technologies.

7. Health and Social Care Funding

The NHS and social care systems remain under significant pressure, with waiting lists and staff shortages at crisis levels. Potential announcements might focus on:

• NHS Funding Boost: There could be further investment in NHS services, especially in mental health and reducing waiting times for treatment.
• Social Care Reforms: We may see plans for long-term social care funding and support, especially for elderly care, where previous promises of reform have stalled.

8. Brexit and Trade Policy Adjustments

While Brexit is now behind the UK, its economic consequences are still being felt, especially in trade and supply chains. Watch for any adjustments in trade policies or support for industries affected by Brexit-related changes, particularly in agriculture, fishing, and manufacturing.

The October Budget will likely be a balancing act, with the Chancellor aiming to stimulate growth, address public concerns over living costs, and maintain fiscal discipline. For households, businesses, and investors, it’s essential to stay tuned for announcements that will directly impact your financial planning.