Six big changes to expect from Reeves’ Budget and how they’ll impact your finances
Chancellor Rachel Reeves has set the scene for tax rises in her autumn Budget on 26 November and everyone from homeowners to pension savers could be in her sights.High inflation and an estimated £30bn fiscal shortfall are putting pressure on the government and ultimately the nation’s finances.Reeves said in a speech in Downing Street earlier this month that “each of us must do our bit for the security of our country and the brightness of its future”.This has been seen as a sign of tax rises to come, especially as the chancellor suggested that she had to “deal with the world as I find it, not the world as I might wish it to be”.The rumour mill has been running for months and with just two weeks to go until the latest fiscal update, here are the key policy changes expected in the Budget and how they might impact your finances.Income tax riseLabour’s main manifesto pledge when it came to power last year was that it wouldn’t raise national insurance (NI), income tax or VAT.Reeves already raised employer NI contributions in her 2024 Budget and it is now expected that an income tax hike is coming.There are rumours that the Treasury is considering an idea from the Resolution Foundation to increase income tax by 2p and reduce employees’ NI by the same amount, which the think tank says could raise £6bn and hit higher earners more than what Labour describes as “working people”.But Sarah Coles, head of personal finance for Hargreaves Lansdown, said it would also hit self-employed people who pay income tax, but not employee NI.Get a free fractional share worth up to £100.Capital at risk.Terms and conditions apply.Go to websiteADVERTISEMENTGet a free fractional share worth up to £100.Capital at risk.Terms and conditions apply.Go to websiteADVERTISEMENTShe said: “They do pay NI, but a different class at a different rate, so they pay 6 per cent on profits over £12,570 up to £50,270 and 2 per cent on profits over £50,270. By only cutting NI for employed people, the system would put more of a burden on the self-employed.”Commentators have also speculated that the chancellor could instead add 1p to the basic rate of tax, increasing it from 20 per cent to 21 per cent.There are rumours that the Treasury is considering a 2p income tax increase More
