Anticipated Labour Budget announcements: What measures might Rachel Reeves unveil?
Headline: Rachel Reeves's Autumn Budget to Bring Significant Tax and Policy Changes
Chancellor Rachel Reeves is set to deliver her first Budget in a few weeks' time, and it is expected to include several significant tax and policy changes targeting pensions, inheritance tax, working people, investors, and more. The government aims to raise around £50 billion through these changes to meet fiscal rules and reduce a projected £57.1 billion shortfall by 2029-30.
Capital Gains Tax No announced hike beyond last year's increase is rumored for capital gains tax, but it remains a focus area from previous budgets.
Pensions Tax Relief and Tax-Free Cash Reeves is reportedly considering reducing or reforming tax relief on pension contributions, possibly moving to a flat rate tax relief for all bands instead of the current marginal system. However, warnings against cutting the tax-free lump sum from pensions indicate this may be off the table or politically sensitive.
Inheritance Tax Changes to inheritance tax rules are expected to raise revenues. The specifics, such as affecting threshold levels or reliefs, are yet to be confirmed.
State Pension and Private Pensions No definitive changes have been reported yet, but pensions more broadly (including private pensions) are under scrutiny for tax relief reforms.
Income Tax Thresholds The freeze on income tax thresholds is planned, which will effectively increase the tax burden on working people by preventing bracket shifts with inflation.
Other Policies and Taxes No specific changes to private school fees, the Freedom to Buy scheme, stamp duty, non-dom status, the British ISA, or air passenger duty have been clearly reported or confirmed ahead of the Budget.
Pensioners could face tax on their retirement income due to frozen tax bands, and if the government reduces the maximum amount of pensions tax-free cash, the limit could be slashed to just £100,000.
Labour has pledged not to increase taxes for "working people" (income tax, National Insurance, and VAT), but changes to CGT could include hiking rates so they're in line with income tax, or reducing the tax-free threshold further.
Prime minister Keir Starmer has suggested that tax hikes will likely be announced in the Budget. The government is believed to be considering reducing the maximum amount of pensions tax-free cash that savers are allowed to withdraw from age 55. An increase in air passenger duty for domestic flights "may be under consideration to discourage domestic air travel and fund rail improvements".
The first-time buyer stamp duty exemption threshold is expected to drop back to £300,000 in the Budget, as confirmed by Labour before the election. Labour has also pledged to make the current mortgage guarantee scheme permanent as part of its flagship housing policy, the Freedom to Buy scheme. A commitment to the state pension triple lock was an important manifesto pledge and has been reaffirmed by Rachel Reeves.
The government has warned that the Budget will contain "difficult decisions" and be "painful". The Autumn Budget looks likely to contain a mix of tax rises and spending cuts to meet fiscal rules and reduce the projected shortfall.
- Rachel Reeves's Autumn Budget may affect personal finance through significant tax changes targeting pensions, inheritance tax, and income tax thresholds.
- The Chancellor is reportedly considering reforming tax relief on pension contributions, which could impact the savings of individuals planning for retirement.
- Changes to inheritance tax rules and the potential reduction of the tax-free lump sum from pensions are expected to generate revenue for the government.
- The government is also scrutinizing private pensions for potential tax relief reforms, which could impact the general-news landscape of personal finance.
- Newsletters covering personal finance, investments, business, politics, and general-news may provide updates on the Budget's impact on personal savings, pensions, and taxes.
