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Which taxes could Rachel Reeves hike in the Autumn budget?
Chancellor Rachel Reeves has admitted tax rises and spending cuts are a possibility in the upcoming budget.
BY Jasmine Andersson, James Hockaday
Rachel Reeves is refusing to rule out another tax-raising budget next month, with reports suggesting she is targeting the wealthy to help boost the government's finances.
The chancellor has recently acknowledged she is considering tax rises to close a gap in the budget, and told the Guardian on 15 October that increased taxes on the wealthy would be “part of the story”.
Now, reports in The Times suggest she will target lawyers, GPs and accountants for tax raids.
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With a hole in public finances estimated to be as high as £50 billion, the paper said that Reeves will announce a charge on workers who use limited liability partnerships (LLP) – often used in the legal and medical world – in her November statement.
These partnerships do not pay employer’s national insurance of 15% as partners are treated as self-employed. Reeves hopes that by introducing a new charge, she can claw back up to £2 billion, the paper reported – although the change is still expected to be lower than the employers’ rate of national insurance.
Meanwhile, Reeves has also sought to blame Brexit for the state of the UK’s economy, arguing that leaving the EU had caused more damage than forecasters had expected at the time.
She told reporters that she is “determined that the past doesn’t define our future and that we do achieve that economic growth and productivity with good jobs in all parts of the country”.
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Asked about her promise not to deliver another tax-raising statement, Reeves added: “This year has been particularly volatile in terms of world events, from Ukraine to the Middle East, to the higher trade tariffs that countries around the world including the UK face. We’re not immune to that, despite the fact that we’re doing trade deals with the EU, India and with the US.
“Of course, that puts pressure on our economy, as does the increased defence spending to keep us safe in an uncertain world.
“I’ll set out all my plans based on the world as it is, not necessarily the world as I might like it to be, in the budget on 26 November.”
Hints of tax rises have been rumoured for months, with various ministers remaining tight-lipped when asked about them, but there have been some hints at what might feature in the budget – here's what we know so far.
Will VAT be raised?
Labour made a commitment in its manifesto not to raise income tax, national insurance or VAT - the sales tax consumers pay on most purchases - but recent messaging has been mixed.
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Reeves has not explicitly ruled out raising VAT, saying she didn't want to go through the manifesto "line by line" before the budget.
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Chief secretary to the prime minister, Darren Jones, appeared to rule out changes to VAT, saying the pledge "still stands" and "you don't need to worry" about the change in language used by Reeves when discussing it.
Conservative leader Kemi Badenoch has previously argued: "Claiming that 'the manifesto stands' is not the same as saying 'no rise in VAT'."
Will income tax thresholds be frozen for longer?
Ministers have been less direct about extending the freeze on income tax thresholds, which is due to expire in 2028/29.
The freeze was implemented by the previous Conservative government and means the threshold at which a person moves up the income tax rates is kept at the same level, rather than increasing with inflation each year.
At the time, the Tories were accused of using it as a stealth tax hike on working people and it generated billions of new revenue for the government.
When asked about it on 29 September, Reeves refused to say whether she would extend the freeze beyond 2028.
Prime minister Keir Starmer also refused to rule out extending the freeze when asked about it at Prime Minister's Questions in July.
What about a wealth tax?
On 16 October, Reeves ruled out a new wealth tax but hinted there would be more taxes on the rich.
There is an appetite for a wealth tax among Labour backbenchers, and the idea has the support of Greater Manchester mayor Andy Burnham.
There has been no hint about what specific taxes Reeves could raise on the rich, but Labour have ruled out increasing income taxes, and the chancellor did note: "Wealth's not about your annual salary."
Will inheritance tax be raised?
The government is also considering changing inheritance tax rules, with several newspapers reporting rumoured changes.
The government has already proposed bringing most unused pension funds and death benefits within the value of a person's estate for inheritance tax purposes from 6 April 2027.
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But the Guardian reported in August that the Treasury was considering tightening rules on the gifting of money and assets.
The paper said the government was considering introducing a lifetime cap on the amount of money a person could give their family member, rather than only taxing assets given seven years prior to death.
It has also been rumoured recently that the government is considering rolling back some of its planned changes to inheritance taxes that apply to farms, which sparked protests in London last October.
The Sunday Times reported on 11 October that officials were discussing raising the inheritance tax exemption limit from the originally planned £1m to £5m.
Could there be a new national property tax?
Sources told The Guardian in August that a potential national property tax would replace stamp duty on owner-occupied homes, although nothing has been confirmed yet.
If ministers do go ahead with the move, the tax would be paid by owner-occupiers on properties worth more than £500,000 when they sell their home, it is understood.
How much they pay would be determined by the value of their home, with a rate set by central government. The tax would not replace stamp duty on second homes.
While about 60% of homes are affected by stamp duty, only a fifth of property sales would be impacted by the new tax based on the average house price, which, according to Nationwide, was £272,664 in July.
The Guardian reported the government hoped the new tax would raise a similar amount of money as stamp duty in the long run.
The Conservatives have pledged to scrap stamp duty if they win the next election, with Badenoch saying she wanted Labour to "steal" the policy.
Which other taxes could rise?
Reeves has faced pressure to raise gambling taxes from Labour's backbenches in a campaign spearheaded by former prime minister Gordon Brown.
They argued for increasing levies on online gambling from 21% to 50% and noted that online gambling remains highly profitable, with the companies often basing themselves abroad.
When asked about the campaign and whether she would consider the tax, Reeves told ITV News on 22 September: "I didn't need MPs or former chancellors to tell me to launch an inquiry into gambling taxation. I did that as chancellor, and I'll set out the plans on the taxation of gambling - and indeed of other areas - in my budget on November 26."
It has also been reported by the Guardian that former deputy prime minister Angela Rayner urged Reeves to increase taxes on banks in a leaked memo published in May.
Amid speculation that Reeves could increase bank levies, the sector has fought back, with Sky News reporting banking lobby group UK Finance is set to publish a report arguing any increase would damage competitiveness.
Sky News also reported that the head of banking giant Goldman Sachs warned her personally against such a move in a private meeting at the start of October.
