Labour inherited a financial mess from the previous Tory government, leading to speculation about potential tax hikes and spending cuts by Chancellor Rachel Reeves. The Budget is scheduled for November 26, with discussions intensifying on the potential measures. Experts suggest extending the freeze on income tax and national insurance thresholds, which could impact millions of taxpayers.
Reeves and PM Keir Starmer have differing views on the freeze extension, with the Institute for Fiscal Studies estimating a significant revenue increase if extended. Other options under consideration include raising the higher tax bands and implementing a wealth tax. However, Reeves has opposed the idea of a wealth tax, highlighting previous measures targeting the affluent.
There are talks of adjustments to stamp duty and property taxes, potentially replacing stamp duty with a new property tax on higher-value homes. Changes to capital gains tax exemptions and inheritance tax rules are also being considered. The banking sector may face increased surcharges, with calls for higher taxes on gambling firms. Potential alterations to pension tax relief and customs duties are also on the table.
These proposed changes aim to address financial challenges and boost government revenue, although they may face opposition from various industries and taxpayers. The government seeks to strike a balance between generating funds and ensuring economic growth while navigating complex tax policy adjustments.