CHANCELLOR Rachel Reeves admitted earlier this week that the government will have to raise taxes to plug a £22billion black hole in finances.
She is due to lay out plans for the country’s finances in October’s budget – but what tax rises could be on the way? We take a look.
It comes after she announced a cost-cutting spree earlier this week as she claimed the Tories had left a £22billion shortfall in the public finances.
This includes winter fuel payments being scrapped for millions of pensioners.
The Chancellor warned MPs that her fiscal statement – which will be announced in Parliament on October 30 – would involve “difficult decisions across spending, welfare and tax“.
Ms Reeves refused to say which taxes could be raised during the Autumn Statement.
She did say that the Party made commitments in its manifesto, not to increase National Insurance, VAT, or Income Tax for the duration and said “we’ll stick with those”.
However, she did not rule out increasing the rate of capital gains tax and making changes to inheritance tax and pension tax relief to raise revenue.
When asked about it, she said: “We will have a Budget on the 30th of October and ahead of that Budget, we will have a forecast by the Office of Budget Responsibility on this occasion, based on accurate numbers.”
That does mean that while anything could happen, there are several taxes that are more at risk of being hiked.
Below Sun Money takes a look at the most likely.
One of the most likely taxes to be adjusted is inheritance tax.
Inheritance tax is paid on the value of someone’s estate after a person passes away.
The estate includes things like property, money and possessions.
There’s normally no inheritance tax to pay if the value of your estate is below the £325,000 threshold.
The standard Inheritance Tax rate is 40% – but it is only charged on the part of your estate that’s above the threshold.
The last government had also been facing pressure to cut the rate.
Now the tax rate could be possibly increased or the amount people have to pay inheritance from could be lowered.
The government could also reduce the number of years allowed when giving away assets before someone dies before inheritance tax kicks in.
Capital gains tax is the money you pay to HMRC when you sell something that has gone up in value, such as stocks and shares, or a second home or even artwork worth £6,000 or more.
It’s the gain you make that’s taxed, not the amount of money you receive.
Some assets are tax-free. You also do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.
Currently, people do not have to pay tax on the first £3,000 of profits, or £1,500 for trusts.
The minimum limit could be removed and the tax could be imposed on assets currently exempt in a bid to plug holes in UK finances.
As with inheritance tax, it is one of the taxes that is being most talked about to be targeted.
Council tax pays for local services such as schools, rubbish and recycling collection and street repairs.
Costs can vary dramatically depending on which council you come under, with residents in some areas paying twice as much as other households each year.
The national limit on how much council tax can be raised is set by the government every year
Each local authority then decides if it will hike it to the maximum or not.
Earlier this year councils across England and Wales upped council tax by a maximum of 4.99% – and 10% in some circumstances.
How much you pay is based on what “band” your property falls under.
There has been talk in recent years that the current band system is “out of date” and it could need an overhaul.
The system is currently set in bands that are based on the 1991 value of homes, which has been branded “absurd” by the Institute for Fiscal Studies and “incredibly poorly designed” by the Institute for Government (IFG).
Labour did say during its election campaign that it would not change council tax bands, but other reforms could be implemented.
MANY local authorities hiked council tax bills in April - here's how to check if you're now paying more.
You’ll first need to find out what council tax band your home is in to work out how much you have to pay.
This can be done on Gov.uk for homes in England an Wales, or on the Scottish Assessors website if you live in Scotland.
You’ll need to enter in your postcode and scroll through the listed addresses to find yours.
Local councils must contact you directly to let you know if your bill is going up or down, for example, via a letter or email.
If you still haven’t heard from your council, you should contact them directly.
The contact details of your local council can be found on the Gov.uk postcode checker.
Business rates are charged on most non-domestic properties, like shops, offices, pubs, warehouses, factories, holiday rental homes or guest houses.
Your local council sends you a business rates bill in February or March each year, for the following tax year.
During the election campaign, Sir Keir Starmer vowed to rip up the business rates system to help small firms.
The Labour chief said it will tear up the business rates system and replace it with a “level playing field” between the high street and online giants.
Now the government is understood to be consulting on changing the system – which could be confirmed in the Autumn Statement.
This change could make the rates related to the value of the land instead of the current rateable value, which is an estimate of how much it would cost to rent that property for a year in April 2021.
Stamp duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
It applies in England and Northern Ireland, with separate property tax schemes running in Scotland and Wales.
You usually pay Stamp Duty on increasing portions of the property price when you buy residential property, like a house or flat.
It only applies to properties over £250,000 and the amount you pay depends on when you bought the property, how much you paid for it, and whether you’re eligible for relief or an exemption.
You don’t have to pay any stamp duty on a property valued up to £250,000, and £425,000 for first-time buyers.
The current system is thought to discourage people from moving houses and is part of the reason older people aren’t moving out of expensive, larger properties.
The Conservatives introduced a further stamp duty cut for first-time buyers in 2022.
The cut means that wannabe homeowners buying houses over a certain amount won’t have to pay tax on it.
This saw the threshold rise from £300,000 to £425,000, but it was due to end on March 31, 2025.
The Chancellor could change the tax so it’s based on annual land value tax instead of on a transaction.
But it’s thought this might be a tricky change to get past the party.
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