THE new government’s first Budget will take place on October 30, and the Prime Minister has said it will include “painful” decisions.
The speech will lay out plans for the country’s finances – but what tax rises could be on the way? We take a look.
The Autumn Statement provides an update on the government’s economic plans, based on forecasts from the Office for Budget Responsibility (OBR).
It comes after Sir Keir Starmer laid the ground for sweeping tax raids as he insisted that households must endure “short term pain” for the “long term good” of the economy.
In a speech last month Sir Keir said: “There is a Budget coming in October, and it’s going to be painful.”
The following day, Chancellor Rachel Reeves refused to rule out increases to both inheritance and capital gains tax.
When questioned on tax increases during a visit to central Scotland on Wednesday, Ms Reeves told broadcasters she would be making “difficult decisions in a range of areas”.
Back in July, she announced a cost-cutting spree 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 – would involve “difficult decisions across spending, welfare and tax“.
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”.
That does mean that while anything could happen, several taxes 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.
It is widely expected that the Chancellor will announce changes to inheritance tax in her statement.
There is speculation that the government might increase the rate, or the thresholds could be lowered, meaning more people would be subject to the tax.
However, Labour may consider shortening the period before death, during which gifts can be made without triggering inheritance tax.
At the moment, gifts made more than seven years before death are exempt from IHT.
Those made within seven years of death could be subject to IHT on a sliding scale, known as “taper relief”.
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.
However, Labour could remove the minimum limit and impose the tax 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 most talked about as being targeted.
Currently, the capital gain tax owed by a basic rate taxpayer depends on the size of the gain, their taxable income and whether their gain is from residential property or other assets.
If this amount is within the basic income tax band, you’ll pay 10% on your gains (or 18% on residential property and carried interest).
You’ll pay 20% on any amount above the basic tax rate (or 24% on residential property and 28% on carried interest).
If you’re a higher or additional rate taxpayer you’ll pay:
Labour previously said it would reintroduce the Lifetime Allowance for pensions, which caps the total amount you can save into your pot tax-free.
This proposal was dropped at the last minute during the election campaign, but Labour may consider other pension tax reforms instead.
Ms Reeves has previously campaigned to reduce the tax relief that higher earners get on their pension and to instead introduce a flat rate of 33%.
Currently, you get tax relief at your marginal rate of tax, so a flat rate of 33% would mean higher earners would get less relief.
This has led some financial commentators to speculate that this reform could be in scope for the Autumn Statement or future budgets.
Another possible target is changing the rules around pensions and inheritance tax.
Currently, pensions are not counted as part of someone’s estate when they die and can therefore be passed on inheritance tax-free. It’s possible that this could be reviewed.
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.
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.
The Treasury has refused to rule out a rise in fuel duty, which could prove a shock to household finances.
The levy hasn’t risen since 2011 and was even slashed by 5p in March 2022.
It was The Sun’s Keep It Down campaign that secured a 12-month extension to the temporary fuel duty cut in March last year.
Motor association The AA has warned that for low-paid workers, losing this tax relief could result in an additional £171.60 in annual fuel costs.
The Household Support Fund (HSF) exists to help families on low incomes with essential costs.
For instance, you can go to your local council if you’re struggling to afford things like:
The support fund is due to close on September 30, but it is possible that the government might choose to extend it, and if so, this could be announced in the Autumn Statement.
The Sun has backed drivers as part of the Keep It Down campaign with rates of fuel duty not rising since the start of 2011.
Former Chancellor of the Exchequer Jeremy Hunt earlier this year thanked Sun readers for helping him to make the case to freeze fuel duty in his last Budget.
The freeze meant drivers would not have to face a potential £100 rise in motoring costs as a result of a 12p per litre duty hike.
Our decade-long campaign fights on behalf of readers to freeze duty on petrol and diesel to help deal with rising living costs.
Mr Hunt said: “I know how much Sun readers are feeling the pinch right now.
“Whether you drive a van, a hatchback or a people carrier I know how much you need to be on the road.
“Keeping it down means hard-working people will have an extra £100 this year without having to cut down using their vehicle.”
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