The recent budget announcement by the Labour party has sparked jubilation among private equity professionals, following a significant reduction in the proposed tax on carried interest. Originally, Labour aimed to raise £565m annually by taxing carried interest at 45%, but after extensive lobbying, the rate was lowered to 32%, expected to generate only £300m by 2030. This decision is seen as a major victory for the British Private Equity and Venture Capital Association, which credits a report by the consultancy EY last year which showed that private equity-backed businesses accounted for about 6% of UK GDP and supported 2.2m jobs across the country.

Pension savers are set to face a significant £3.4bn inheritance tax burden due to new regulations announced by Chancellor Rachel Reeves. Starting from April 2027, pension pots will be included in the value of a deceased person’s estate, making them subject to inheritance tax for the first time. This change is expected to impact around 50,660 families annually, with 8% of all estates affected. Baroness Ros Altmann, a former pensions minister, said: “Taking away the ability for savers to pass on their funds as a pension for their offspring is a really bad decision.” The reform will primarily affect private pensions, while public sector defined benefit pensions remain exempt. Meanwhile, The Telegraph reports that the number of grieving families being hit by inheritance tax will double by the end of the decade, with forecasts by the Office for Budget Responsibility indicating an 85% increase in inheritance tax receipts to the Treasury – from £7.5bn to £13.9bn over the same period.

Grieving families are facing increased financial burdens due to a rise in the interest rate charged by HM Revenue and Customs (HMRC) on unpaid inheritance tax. The Government has announced a 1.5 percentage point increase, bringing the rate to 9%, which could add £750 a month to tax bills for families already under stress from civil service delays. Kieran Bowe from Russell-Cooke stated: “The Government’s proposal to increase the interest charge adds further financial pressure to already hard pressed bereaved families.” The new rate is expected to generate an additional £215m annually for HMRC by 2029-30. Dawn Register, of BDO, said: “The increased rate is a surprisingly draconian measure considering the already high level of late payment interest that taxpayers are charged, currently 7.5%.”

Charity bosses have warned they’ll have to scrap services after the Chancellor’s increase in NICs for employers. The voluntary sector employs around one million people – the National Council for Voluntary Organisations (NCVO) warns of a £1.4bn-a-year blow to their staffing bill. Age UK and Marie Curie are among the charities warning of a cut to the support they can offer. The Association of Chief Executives of Voluntary Organisations has written to Rachel Reeves asking that charities be exempted from the rise.

The £25bn increase in employer National Insurance contributions (NICs) announced by Rachel Reeves will likely lead to lower wage increases for private sector workers, the Chancellor has admitted. “I recognise there will be consequences,” Reeves told the BBC. “It will mean that businesses will have to absorb some of this through profit and it is likely to mean that wage increases might be slightly less than they otherwise would have been.” Public sector employees, who have already received significant pay rises, will not be affected by the increase. Critics argue that this move contradicts Labour’s manifesto promise of no tax increases for working people. Paul Johnson from the Institute for Fiscal Studies warned that the NICs hike would ultimately lead to lower pay for workers while Tom Clougherty, the director of the Institute of Economic Affairs, said it was “fantasy” to suggest working people wouldn’t be hit by the change.

The decision by Rachel Reeves to add an additional 2% stamp duty surcharge on second home purchases, raising the total to 5% on top of standard rates, prompted a frantic rush among Central London estate agents to finalise multi-million pound property deals before the midnight deadline. Meanwhile, agents are also expecting a flood of demand from first-time buyers hoping to buy will want to push through purchases in advance of a reduction in the stamp duty threshold from £450,000 to £300,000 next April. This will land the average first-time buyer in London with a potential tax increase of £6,190. The Telegraph reports on buyers forced to drop out of chains because they are using let-to-buy and cannot afford the sudden increase in stamp duty. Riz Malik, of brokerage R3 Mortgages, said: “Getting these sorts of chains tied up has already been a nightmare. And now one of my clients is having to find £15,000 – that’s before I speak to other people in the same position. It’s a major issue.”

The car loans scandal has escalated as Metro Bank temporarily halted its asset finance lending to reassess its systems following a significant Court of Appeal ruling. This judgment raised the standards for disclosing commission arrangements between credit brokers and lenders, leading to several lenders freezing their motor finance operations. Metro Bank stated: “We anticipate lending will recommence very shortly,” after introducing a new commission consent form for brokers. The Financial Conduct Authority’s inquiry into motor finance, covering deals from April 2007 to January 2021, has raised concerns about potential compensation claims amounting to billions.

The Financial Conduct Authority (FCA) has urged British financial firms to enhance their resilience against potential operational disruptions, particularly in light of the recent global chaos caused by CrowdStrike’s software update failure. The FCA highlighted that unregulated third-party issues were the primary cause of operational incidents reported from 2022 to 2023. Although consumer harm was minimal following the incident, the FCA said firms need to improve testing scenarios and third-party risk controls. Companies have until March 2025 to implement these measures to ensure they can withstand severe disruptions.

The Labour Government announced on Wednesday that it would conduct a review into the loan charge scandal, which has led to ten suicides. HMRC has been strongly criticised for how it made demands of those caught up in tax-avoidance schemes. Around 60,000 contractors were hit with crippling tax bills after entering schemes they believed to be HMRC-compliant. The Chancellor, Rachel Reeves, said the Government would commission an independent report to “help bring the matter to a close for those affected, whilst ensuring fairness for all taxpayers”.

Scottish Financial Enterprise is partnering with The City of London Corporation to host the Scottish Investment Summit in Edinburgh next autumn, aiming to attract global investment. The event will coincide with the Scottish Financial Services Awards, where over 700 leaders will celebrate the industry’s contribution to Scotland’s economy, valued at £14.8bn and supporting 148,000 jobs. Alasdair King, the newly elected Lord Mayor of the City of London, emphasised Scotland’s appeal, stating: “The Investment Summit will be the perfect opportunity to showcase Scotland to investors from around the world.”

Ten-year UK bond yields surpassed 4.5% for the first time in a year following Labour’s Budget, raising concerns about higher borrowing costs going forward. The pound experienced its largest drop in over 18 months following Rachel Reeves’s announcement of significant tax and borrowing increases. Megum Muhic, of RBC Capital Markets, said the markets were “unconvinced” that Ms Reeves’s spending plans would boost growth. Elsewhere, Ruth Gregory of Capital Economics said the move in UK borrowing costs had wiped out half the Chancellor’s borrowing headroom. Meanwhile, former Tory PM Liz Truss said Labour’s Budget would push the country into bankruptcy, arguing that the Chancellor was being backed by the Bank of England and the Treasury “because she is going along with their high-tax, high-regulation orthodoxy.” Reeves attempted to calm investor nerves, telling Bloomberg the Labour Government was committed to “economic and fiscal stability.” There was some relief for Labour, however, after the International Monetary Fund stepped in to support the Government, arguing the measures announced in the Budget would boost growth “sustainably”. Finally, the IFS said Reeves could be forced to top-up her spending plans by an additional £9bn after the next financial year to avoid ushering in real-terms cuts to unprotected Whitehall departments, including councils, the justice system and prisons.

A YouGov poll has found that 51% of people think the economy will get worse following Labour’s Budget, while just 17% believe it will improve. Some 47% said they expected their own financial situation to worsen over the next 12 months.