Autumn budget and US Election

Finances| 2 MIN READ

The Budget and the US election result

Written by Sally Dempsey
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The Budget in bullet form

Non- domiciled status abolished from 6 April 2025 – as expected
VAT exemption on private school fees abolished – as expected
Capital Gains Tax increased – as expected
- will increase from 10% to 18% for Basic Rate (20%) taxpayers and from 20% to 24% for Additional and Higher rate (40%+) taxpayers from 30 October 2024.
Inheritance Tax (IHT) changes:
- Pensions From 6 April 2027, when a member dies with a remaining pension pot, the pot will be treated as being part of that person’s estate and subject to IHT. The impact of this on you will be quantified at your next review.
- Business Relief From 6 April 2026, Business Relief will be changed.(designed to allow family businesses to be passed on without incurring tax). The 100% rate of relief will continue but only for the first £1 million. Thereafter, businesses more than £1 million will only receive 50% relief.
National insurance
- Employer NI (not Employee NI) will increase to15% from April 2025 and the level at which NI starts to be charged will reduce to £5,000 from the current £9,100
- Smaller businesses will be helped by a rise from £5,000 to £10,500 of an annual grant (The Employment Allowance).
Stamp Duty
- After 31 October 2024, Stamp Duty for purchases of a second properties will increase from 3% to 5%.

The US Election result

The election is over, and we have a result. We know who the President is, so there has been an immediate falling of uncertainty for the 40% of Americans preferring President Trump. Even though uncertainty increases for the 40% Democratic supporters it should fade as the House and Senate majorities make it clear that President Trump won’t be able to accomplish his more radical promises made to his supporters.

The results of the US election are:

US legislation is required to be separately considered by the Senate and the House of Representatives. Only after both agree, does the legislation go to the President for his approval to become law. Even though, the Republicans have a majority in both the Senate and the House, these are slender majorities which only a few disenchanted Senators or Congressman can change, so there will likely be gridlock on any contentious change.

So, uncertainty is already falling and it looks like a degree of political gridlock, creating market certainty and a tailwind that we expect to propel stocks higher globally for the rest of the year and hopefully into 2025. Whilst an American election, it should reap global benefits as the US market is nearly three-quarters of the global market and the rest of the developed world tends to move in the same way. Worries persist on President Trump’s proposed tariffs and fiscal policies, but as the gridlock becomes more apparent, relief should propel markets worldwide.

In the last week, US equity markets have risen but the bond markets seemed less pleased, believing a Trump presidency will come with higher debt and inflation. Both are an initial reaction, and we expect markets to return to a moderate rate. All the talk of what a Trump presidency and Trump policies mean for markets is premature at this time.

Where stocks will go in 2025 will depend on the degree of political gridlock but equally on the traditional economic data and investor sentiment throughout the developed world. The most appropriate time to form a hard view of 2025 is in December and we look forward to sharing our forecast with you at that time.

Investment Committee

F3 Wealth

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