Chancellor hints at potential tax increases in upcoming Budget, aiming to fill £22 billion gap.

From Morningstar: 2024-07-31 05:59:00

Chancellor Rachel Reeves has hinted at potential tax increases in the upcoming Budget, sticking to Labour’s promise not to raise national insurance, income tax, or VAT. Reeves stated that taxes would likely be raised during the budget announcement on October 30, following the need to fill a £22 billion gap in public finances. She did not specify which taxes would be affected, leaving room for inheritance or capital gains tax adjustment. Reeves emphasized the importance of fiscal rules and committed to balancing day-to-day spending through tax receipts. In response to unfunded commitments from the previous government, she announced immediate action to address a £5.5 billion shortfall, with further decisions to come at the budget. The public sector will also see pay increases, including a raise for junior doctors. Reeves acknowledged the need for tough decisions across spending, welfare, and taxes to meet fiscal rules. Treasury officials are conducting an audit of public spending as part of Labour’s efforts to address financial challenges responsibly.Various spending commitments have been canceled, including infrastructure projects like the Stonehenge Tunnel. A Treasury spokesperson confirmed that tough decisions regarding tax and spending will be made during the October 30 budget announcement, with a commitment not to increase national insurance, VAT, or income tax.



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