As Prime Minister Keir Starmer warns of “painful” decisions ahead for the UK’s public finances, speculation is mounting about which taxes could be raised in the upcoming Autumn Budget. While Chancellor Rachel Reeves has ruled out increases to income tax, national insurance, and VAT, economists believe she will still seek to raise at least £20 billion in extra tax revenue through measures targeting the wealthy, businesses, and pension savers.
One key area of focus is expected to be capital gains tax (CGT), which is paid on profits from the sale of assets such as shares and second homes. Aligning CGT rates with those of income tax could raise a significant sum for the Treasury, with the highest rate of CGT currently at 28%, far lower than the 45% top rate of income tax. Cutting reliefs against inheritance tax, such as on business assets, could also bring in around £1.5 billion.
Pensions are another potentially lucrative area for the government to explore. Restricting relief on pension contributions to the basic rate of income tax could boost Treasury coffers by £15 billion a year in the long term, mostly from the top 20% of earners. However, any changes to pensions would likely prove politically contentious.
Labour has also hinted at boosting levies on employers, possibly by imposing employer national insurance on pension contributions or rental income from buy-to-let landlords. While the government has pledged to create a stable platform for business investment, this does not mean companies will escape unscathed from the Budget.
Ultimately, with Starmer and Reeves having invested significant political capital in preparing the public for a tough Budget, economists believe the government will be aiming to raise at least £20 billion a year in extra taxes through a combination of targeted measures. As the UK braces for tax rises, wealthy households and businesses, in particular, will be keeping a close eye on the Autumn Budget.
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