Rachel Reeves Confirms Upcoming Tax Increases

Chancellor Rachel Reeves has confirmed that taxes will rise in the upcoming Budget on October 30, targeting areas such as inheritance tax, pensions relief, and capital gains.

Why it matters: The planned tax hikes and their implications will continue to be a contentious topic among politicians and the public as the government attempts to address the inherited fiscal challenges.

The details:

• Reeves blamed the previous government for leaving a £22 billion black hole in the national budget, necessitating tough fiscal decisions.
• While exact details are still under wraps, several tax areas are being considered for hikes to raise over £10 billion.
• Reeves has ruled out increasing the main rates of income tax, national insurance, or VAT.
• Critics highlighted that nearly half of the alleged funding gap resulted from Reeves’ concessions to union demands for substantial public sector pay raises.

Speaking on the News Agents podcast, Reeves stated, “I think that we will have to increase taxes in The Budget.”

The reaction:

• Shadow Chancellor Jeremy Hunt criticized Reeves, stating, “By refusing to take the difficult decisions needed, Rachel Reeves will do what she planned all along like every Labour Chancellor in history – raise your taxes.”
• The Labour party’s election campaign warnings about potential tax increases and potential impacts on pensioners have further fueled the controversy.

Possible measures:

• Increasing the inheritance tax rate from 40% to 45%
• Reversing the 5p cut in fuel duty
• Equalizing the 28% top rate of capital gains tax with the 45% top rate of income tax
• Introducing a 30% tax on pension contributions

What’s next: As the October 30 Budget approaches, the government continues to face the balancing act of maintaining public services and addressing the fiscal challenges they have inherited.

Full story

The chancellor, Rachel Reeves, has confirmed that taxes will rise in the upcoming Budget on October 30.

The Tories left a £22 billion black hole in Britain’s finances.

With @RachelReevesMP as Chancellor, Labour will fix the foundations of our economy. pic.twitter.com/Q2tE8QImaU

— The Labour Party (@UKLabour) July 30, 2024

She blamed the previous government for leaving a £22 billion deficit in the national budget, which necessitates tough fiscal decisions. While exact details are not yet known, several tax areas are being considered for hikes to raise over £10 billion.

Reeves has ruled out increasing the main rates of income tax, national insurance, or VAT. “I think that we will have to increase taxes in The Budget,” Reeves stated on the News Agents podcast.

The Tories left Britain's finances in their worst state since the Second World War.
 
This Labour Government will take tough decisions to deliver the long-term solutions that will make you better off. pic.twitter.com/YDO4CyDLbH

— The Labour Party (@UKLabour) July 29, 2024

She also clarified on LBC Radio, “I’m not going to write a budget on this programme, but the commitments we made in our manifesto not to increase National Insurance, VAT, or income tax and also the triple lock, our commitments in our manifesto, stand.

We will stick by those. But there’ll be more difficult decisions to come in the Budget because of the inheritance that we now face.”

The Conservatives left a £22bn black hole in the public finances.

I've taken the tough decisions to fix the foundations of our economy and restore economic stability. pic.twitter.com/WHH904xp4J

— Rachel Reeves (@RachelReevesMP) July 30, 2024

Shadow Chancellor Jeremy Hunt criticized Reeves, saying, “By refusing to take the difficult decisions needed, Rachel Reeves will do what she planned all along like every Labour Chancellor in history – raise your taxes.”

The Labour party’s election campaign warnings about potential tax increases and impacts on pensioners have further fueled the controversy.

upcoming tax increases and budget plan

To address the £16 billion needed to balance the books, various measures have been floated. These include increasing the inheritance tax rate from 40% to 45%, reversing the 5p cut in fuel duty, and equalizing the 28% top rate of capital gains tax with the 45% top rate of income tax. Introducing a 30% tax on pension contributions has also been considered.

On Monday, Reeves cited the budget deficit as justification for stripping winter fuel payments from 10 million pensioners, abandoning the planned social care cap, and halting major road projects. Critics highlighted that nearly half of the alleged funding gap resulted from Reeves’ concessions to union demands for substantial public sector pay raises. Reeves’ review also revealed that even with emergency measures, a £16.4 billion shortfall remains.

Labour’s manifesto includes pledges to scrap non-dom status, add VAT to private school fees, and increase stamp duty on foreign buyers, aiming to generate £2.5 billion by 2028. As the October 30 Budget approaches, the planned tax hikes and their implications will continue to be a contentious topic among politicians and the public. The government faces the challenge of balancing the books while still delivering on campaign promises.