Reeves plots higher taxes for wealthy to balance budget

Rachel Reeves, the Chancellor, is set to call upon wealthier individuals to contribute more in taxes as she faces a significant financial shortfall in the public finances. According to Treasury sources, the Government will not look to reduce spending on public services or drastically increase borrowing. Instead, Reeves aims to fill a £20–30 billion gap by targeting those with higher incomes and assets through increased taxation. She is expected to argue that reforms designed to boost economic growth, such as easing planning regulations, will safeguard working families from tax hikes.

Insiders emphasise that Reeves is determined to act fairly, asking the better-off to help rebuild vital services. A Treasury source described her as prepared to make tough decisions to protect the stability of public finances, with no intentions to return to austerity. The British economy is currently dealing with what officials describe as a once in a generation challenge, dismissing the idea of simple fixes. Cuts to public spending are off the table, but so too are significant rises in borrowing, as this would increase the national debt burden for future generations and could risk economic stability in the bond markets.

Speculation has mounted that taxes on property, investments, pensions, and inheritance could rise by tens of billions. Reeves is also under pressure from different corners of the Labour Party, with some members urging her to expand wealth taxes or align capital gains rates with income tax. However, Government analysis has shown that increasing capital gains tax could ultimately cost the exchequer money. Recent analysis by HMRC warned that higher CGT rates may prompt investors to hold on to assets, which would reduce sales and lead to lost tax revenue. Raising the higher CGT rate by five points would lose £870 million a year before the decade ends, and even a one point increase could mean a £30 million loss.

There are also warnings about the impact on the property market. Higher stamp duty on second homes or top-value properties could breach the Laffer curve, meaning any further rate increases would reduce, not raise, revenue. Despite these concerns, Ms Reeves intends to build a larger fiscal buffer to protect against future economic volatility and rising borrowing costs, which may require raising more than £30 billion in new revenue in the upcoming Budget.

Reeves and the Labour leadership are also highlighting the economic after-effects of Brexit, seeking to link lower productivity forecasts to leaving the EU. This marks a shift from previous reluctance to criticise Brexit, especially with a focus on Red Wall electorate sensitivities. Her detractors argue recent rises in employers’ National Insurance have reduced business investment and job creation, with industry leaders blaming the policy for higher inflation compared to European counterparts.

In the run-up to the Budget on 26 November, ministers hope pro-growth measures like further planning reform will reduce the deficit’s scale. The Office for Budget Responsibility estimates that planning changes could add £6.8 billion to the economy by 2030, yet the fiscal effect of other initiatives remains uncertain. Reeves is committed to stimulating growth and unlocking investment without returning to austerity or risking financial instability, but with large tax rises now looking all but inevitable, the focus is on who will bear the cost and how the Government will deliver on its promises of fairness and stability.