Reeves’s pre-budget speech was all about preparing the ground for some painful measures later this month, according to Rachael Griffin, tax and financial planning expert at Quilter. she said: “She knows this budget will define her credibility, and her message today was clear that Britain’s finances are in a worse state than many realise, and everyone will be expected to play their part in putting them back on track.
“Reeves was at pains to distance herself from the politics of austerity, arguing that deep cuts and short-term fixes are what weakened the country’s economic foundations in the first place.
“But while her argument against renewed austerity will appeal to many scarred by the last decade, it also lays the groundwork for a different kind of pain, which is higher personal taxes to rebuild public finances. She’s made it clear she is happy to be unpopular if it helps secure public finances.
Read more: How to protect yourself against tax rises in the budget
“Her insistence that ‘easy answers’ are off the table is a warning that there will be few giveaways in this budget. The chancellor is trying to convince both markets and the public that fiscal discipline can coexist with fairness, but for households already facing high borrowing costs and squeezed budgets, the idea of contributing more will still be a tough sell.
“This was a speech designed to project authority and honesty, not to win popularity. The real challenge for Reeves will come when she has to translate that rhetoric into decisions that feel credible to investors but also tolerable for working families.”
Reeves has indicated that she intends to build a bigger margin of error against her fiscal rules than the £10bn she left herself last year.
“There is a reward for getting these decisions right, to build more resilient public finances with the headroom to withstand global turbulence,” the chancellor said.
This would give business confidence to invest and leave government freer to act when shocks hit, she added.
Labour’s manifesto promised not to raise VAT, income tax or national insurance. However, Reeves has pointedly declined to repeat those words “line by line” in recent interviews.
If Reeves increases income tax it will be the first rise in the rate since 2010, when Labour introduced a 50% additional rate on incomes over £150,000 which was reduced to 45% by the coalition government.
Currently, income tax is charged on earnings above the personal allowance of £12,570, which is tax-free.
The basic rate of 20% applies to income between £12,571 and £50,270, while earnings from £50,271 to £125,140 are taxed at the higher rate of 40%. Income above £125,140 is subject to the additional rate of 45%.
These thresholds apply to most taxpayers in England, Wales and Northern Ireland, while Scotland has a separate system. The basic rate of income tax has not been raised since the 1970s.
Read more: 12 taxes you may not hear about in the budget – and what you can do about them
Reports suggest that the chancellor is considering a 1p increase in income tax across all bands. For someone earning £35,000 a year, roughly the average UK income, an extra penny on income tax would lift their annual bill from £4,486 to £4,710, an increase of more than £200.
Officials are also understood to be examining an alternative plan to raise income tax while cutting the main rate of employee national insurance by the same amount. Such a move would shift the tax burden towards pensioners, landlords, savers and those with dividend income while cushioning the impact on working households.
Sky News reported that Treasury officials are looking to protect the incomes of the lower two-thirds of earners – those earning less than £45,000, according to Labour.
Former chief secretary to the Treasury Darren Jones insisted that “the pledge still stands” and told voters they “don’t need to worry” about the shift in tone.
A more subtle change could come through the extension of the income tax threshold freeze beyond 2028/29. The policy, introduced by the Tories, keeps tax bands static despite inflation, a move critics call a stealth tax. Both Reeves and Keir Starmer have refused to rule out continuing it.
The freeze, first introduced in 2021, has pushed more than 8.3 million people into higher or additional rate tax brackets, an increase of over 45% since it began.
The chancellor has ruled out a blanket wealth tax but hinted at fresh measures targeting accumulated assets rather than income. “Wealth’s not about your annual salary,” she said in September, prompting speculation about new levies on property.
A Mail on Sunday report suggests a “mansion tax” could be introduced, imposing an annual 1% charge on the portion of a property’s value above £2m, equivalent to £10,000 on a £3m home.
There are roughly 160,000 homes in the UK worth £2m or over, according to Zoopla. This equates to 0.6% of all homes.
Read more: How to sell your home before the budget
The 1% annual levy would mean owners of a £3m property would face a bill of £10,000 every year. Meanwhile, those living in a home valued at £5m would face a bill of £30,000 a year.
Another option under review, according to The Guardian, is a national property tax to replace stamp duty for owner-occupiers of homes worth more than £500,000.
The levy would apply when the property is sold, with rates linked to its value. It would not replace stamp duty on second homes.
According to The Times, Reeves is considering new levies on wealthy Britons leaving the UK. The report said the Treasury is examining a possible 20% “settling-up charge” on business assets, matching the current rate of capital gains tax (CGT), which could raise about £2bn.
The proposal would effectively act as an “exit tax” on individuals moving their wealth overseas, bringing the UK into line with other G7 economies. At present, the UK and Italy are the only members that do not apply CGT to departing residents selling their assets.
Marc Acheson, global wealth specialist at Utmost Wealth Solutions, said: “Such a measure risks further eroding the UK’s attractiveness to the global wealth community.
Read more: Why taxes will rise after the budget, and how to protect yourself
“Even talk of it could prompt behavioural responses and encourage wealthy people to try to leave in advance of it potentially being applied. With the country’s highest taxpayers making an outsized contribution to tax revenues, any further loss of this community could likely reduce the overall tax take.”
Speculation has mounted that Reeves may be forced to abandon one of Labour’s key manifesto pledges, either its promise not to raise flagship personal taxes or its commitment to maintain strict fiscal rules on borrowing, when she delivers her budget.
According to Bloomberg, Reeves will make a final decision on which taxes to raise only after receiving updated forecasts from the Office for Budget Responsibility (OBR).
The OBR is expected to downgrade the UK's productivity performance, which could widen the public finance gap by an additional £20bn.
Analysts said the chancellor is on course to raise taxes faster than any of her predecessors in decades.
Capital Economics estimated that Reeves could announce up to £38bn in new taxes in the November budget, following the £41.5bn of revenue measures in her first budget earlier this year.
The Treasury is considering changes to capital gains tax (CGT) as Reeves searches for new sources of revenue, according to The Times.
CGT is levied on the profit made from selling assets such as second homes, shares or valuable collectibles and currently raises around £13.3bn a year. At present, gains on the sale of an individual’s main home are exempt under the long-standing principal private residence relief.
That exemption could soon narrow. Officials are examining whether to remove relief for higher-value properties, which would bring certain home sales into the CGT net for the first time. Such a change would mark one of the most politically sensitive shifts in property taxation in decades.
Read more: Do not cut cash ISA allowance, MPs warn government
Under current rules, higher-rate taxpayers pay 24% capital gains tax on property gains, while basic-rate taxpayers face an 18% charge. A homeowner who bought a main residence for £200,000 and sold it for £210,000 would ordinarily keep the full £10,000 profit tax-free, except in limited cases, such as properties larger than 5,000 square metres (just over an acre) or where part of the home has been let out.
The Treasury has not yet indicated where the threshold for “high-value” homes might be set, but analysts say even a modest adjustment could generate billions. The OBR estimated that if only the top 2% of property transactions were affected, the measure could raise several billion pounds annually.
Economists warn, however, that the gains could be offset by behavioural effects. Property market specialists argue that imposing CGT on prime homes could deter sales and depress transaction volumes, limiting the overall yield.
Reports suggest the government is considering making new UK stock listings exempt from stamp duty for their first three years on the market.
Investors pay 0.5% stamp duty on UK share purchases, a levy that runs counter to Reeves’ stated aim of reviving the London stock market and encouraging new listings. Granting an exemption to newly listed companies would remove a barrier to investing in domestic equities and could attract a broader pool of investors.
Read more: Why you shouldn't raid your pension on budget speculation
Some economists argue the chancellor could go further by extending the exemption to all UK shares, noting that the tax discourages investment in domestic companies at a time when policy is focused on stimulating capital formation and market growth.
If a blanket removal of stamp duty proves too costly for a Treasury under pressure to raise revenue, a more limited version could be introduced. Removing the duty on shares held within ISAs, for example, would cost about £120m based on estimates from AJ Bell customer data.
Reeves is said to be preparing to slash the tax-free cash ISA allowance in next month’s budget, in what Treasury officials describe as a bid to “redirect savings into productive investment”.
Under current rules, savers can shelter up to £20,000 a year across different ISA products – including cash, stocks and shares, lifetime and innovative finance ISAs – with any interest or gains shielded from tax.
Reeves reportedly intends to roughly halve the limit for cash ISAs, while maintaining the overall £20,000 cap for investments in equities.
The move would effectively push more retail capital into UK companies, a long-standing policy goal in Westminster. Treasury officials argue that the reform will “benefit British savers with higher returns, British companies with an injection of cash and the UK economy by better financing for the private sector.
Read more: What a cut to the cash ISA tax-free savings limit could mean for your finances
However, financial advisers and consumer groups have warned that the change risks undermining confidence among cautious savers at a time when household budgets remain stretched.
Critics say the measure penalises the very voters Labour promised to protect, middle-income earners who have relied on cash ISAs for low-risk returns amid years of economic uncertainty.
A report from the Treasury select committee, underlined those concerns, describing the cash ISA as “among the most popular and well-understood savings products” in Britain. MPs urged ministers to preserve the simplicity of the scheme and instead examine other tax reliefs, such as the personal savings allowance, if the goal is to raise revenue.
Reeves, who has framed the policy as part of her effort to “rebuild Britain’s economic foundations”, is expected to argue that savers will benefit in the long run from stronger returns. But with the cost of living still high and interest rates elevated, she faces a difficult sell to households wary of greater financial exposure.
The reform is likely to take effect from 6 April 2026, giving savers one final tax year to maximise their cash ISA contributions at the current level.
Inheritance tax reform is also on the table. From April 2027, unused pension funds and death benefits will already count toward taxable estates. Officials are exploring further restrictions on lifetime gifts, including a potential cap on how much an individual can transfer tax-free to relatives.
Meanwhile, The Sunday Times has reported internal debate over whether to raise the inheritance tax exemption threshold to £5m, a response to protests from farmers and rural campaigners.
Another big pre-budget talking point centres around pensions, particularly whether the chancellor has her eyes on reducing the tax-free cash amount.
At present, savers from 55 years of age can take out 25% of their pension up to £268,275 as a one-off, tax-free lump sum. Concerns that this amount could be lowered in the budget may lead to some people acting earlier than they had planned.
Read more: What you need to think about before taking a tax-free pension lump sum
Similar speculation before last year’s budget led many investors to withdraw lump sums from their pensions, only to try to row back on that move when the tax-free amount wasn’t changed.
Advisers and consumers are being warned that if they decide to take tax-free cash before this budget, this move cannot be reversed if the figure is left untouched on 26 November.
Motorists have been warned to brace for higher fuel prices this autumn as Reeves faces growing pressure to plug a major tax hole.
Treasury officials are looking to remove the temporary 5p per litre reduction introduced in 2022 and apply inflation-linked adjustments to duty rates measures that could generate around £2.7bn in additional annual revenue.
Currently, the standard fuel duty rate stands at 52.95 pence per litre for petrol and diesel, unchanged since 2011 apart from the temporary 5p reduction.
That cut, introduced as an emergency response to soaring fuel costs in 2022, has since been extended through the 2025/26 financial year.
Retailers are lobbying against reports that the chancellor plans to introduce a business rates surtax on large commercial properties from April 2026.
Read more: UK pensioners set for 4.8% boost under triple lock next April
In a letter organised by the British Retail Consortium (BRC) and signed by senior executives from Tesco (TSCO.L), Sainsbury’s (SBRY.L), Aldi, Asda and others, supermarket bosses warned that “our ability to absorb additional costs is diminishing” and that “it will be households who inevitably feel the impact”.
Helen Dickinson, BRC chief executive, said: “Supermarkets are doing everything possible to keep food prices affordable, but it’s an uphill battle, with over £7bn in additional costs in 2025 alone.”
Within Labour ranks, pressure is growing to increase gambling duties. Former prime minister Gordon Brown has led calls for online gambling levies to rise from 21% to as high as 50%.
Reeves told ITV News in September: “I didn’t need MPs or former chancellors to tell me to launch an inquiry into gambling taxation. I did that as chancellor, and I’ll set out the plans on the taxation of gambling — and indeed of other areas — in my budget on 26 November.”
Banks, meanwhile, are warning against any increase in sector-specific taxes. According to Sky News, lobby group UK Finance is preparing to argue that higher levies would harm competitiveness, while senior executives at Goldman Sachs (GS) privately cautioned Reeves against such a move last month.
Reeves told the BBC that she would take “targeted action to deal with cost of living challenges” while inflation remains high. Measures could include cutting the 5% VAT on energy bills, potentially to zero, or reducing regulatory levies on utilities.
“On food prices we set out last year a review of our business rates system and we will be setting out more detail in the budget on that,” the chancellor said.
Reeves is expected to announce an increase to the national living wage. According to The Times: “The chancellor is likely to confirm a rise in the national living wage of about 4%, from £12.21 to at least £12.70, in an effort to deliver on her pledge to improve living standards”.
The newspaper said she would also commit to extending it to 18- to 21-year-olds. The rate applies to those 21 and over.
The government may also close the small-parcel import loophole, which allows overseas retailers to send goods worth under £135 to the UK without paying import duties, a rule UK firms say gives foreign platforms such as Shein an unfair advantage.
Reeves has pledged to restore “stability, credibility and fairness” to the public finances after years of volatility. But with borrowing costs still high and public services under strain, analysts warn that the chancellor faces hard choices and few easy options to make the numbers add up.
The EY Item Club has downgraded Britain’s growth for next year, indicating that the economy will continue to expand at a sluggish pace, limiting tax receipts and the chancellor’s financial room for manoeuvre.
Matt Swannell, the club’s chief economic adviser, said: “The combination of potential tax rises, global trade disruption and high interest rates is still anticipated to put a brake on economic momentum and produce modest growth over the next year.”
The autumn statement will be delivered in the House of Commons on 26 November, shortly after prime minister’s questions.
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