As the days start drawing in again, all eyes are focused on the end of October when the Chancellor, Rachel Reeves, will deliver her first Budget. The timing of the day before Halloween lends itself to some joking scary references, but the context of the new Labour government’s initial Budget is sobering. Following the dramatic revelations about the poor state of the Treasury finances within three weeks of taking power, both the Chancellor and Prime Minister Kier Starmer have referred to “difficult choices” to be made. The first of these – restricting the Winter Fuel Allowances for pensioners – was immediately controversial. While Labour’s election manifesto ruled out income tax or national insurance rises, the promise to add VAT to private school fees is already in train for January.
Our feature in this edition of our newsletter focuses on the Chancellor’s likely targets for tax increases in the Budget. After promising not to raise taxes for working people, taxing other forms of wealth seems likely to be in her sights. Meanwhile the burden on those paying tax at higher rate is falling on ever more shoulders, with over a million more people becoming higher-rate taxpayers since the threshold freezes of 2021/22. New, higher rate brackets introduced in Scotland and the lowered additional-rate threshold from 2023/24 have swelled these numbers further. The threshold freezes are due to remain in place until 2028, although it is possible even then they will not be updated – the Chancellor may see retaining a strategy already in place as less difficult than introducing new measures.
Our other stories include:
- Interest rates take a step down
- Dividends deliver – behind the headlines
- The truth about student loans
