A swathe of tax rises and spending cuts are expected to be announced by Labour this week in the autumn Budget announcement.
Rachel Reeves will present her first Budget as Chancellor to the House of Commons on Wednesday, in which the government will attempt to fill a £22 billion “black hole” in the public finances.
It is expected that Labour will announce hikes in employers’ national insurance, capital gains tax and inheritance tax to help plug funding gaps, while changes to fuel duty, stamp duty and tax on e-cigarettes are also thought to be among the measures.
It remains to be seen whether Labour will stick to its manifesto commitment not to hike the three main taxes of income tax, national insurance and VAT for “working people”, with Reeves saying the government faces “difficult decisions on spending, on welfare and taxation”.
Here’s a look at what to expect in the Budget announcement on Wednesday and when it will be announced.
When is the budget announcement?
Chancellor Rachel Reeves will make the autumn budget announcement in the House of Commons at 12.30pm on Wednesday October 30.
What is the Chancellor expected to announce?
Taxes
Labour has pledged to stick to its manifesto promise not to raise the major taxes on “working people”. This includes National Insurance, Income Tax and VAT.
It’s expected that National Insurance employer contributions will increase by at least one percentage point, while the freeze on Income Tax thresholds is expected to be extended.
Inheritance Tax may be changed to extend the number of years someone has to stay alive after passing on wealth as a gift from seven to 10 years.
Speculation suggests Capital gains tax, which is paid on the proceeds from selling an asset, could increase and changes could be applied to shares or other chargeable assets.
Fuel duty, which is included in the price motorists pay for petrol at the pump, may be raised for the first time in more than a decade. The tax was frozen by the Conservatives between 2010 and 2022, and then cut by 5p to 52.95p per litre, where it remains.
The tax on e-cigarettes is also expected to increase, echoing Conservative predecessor Jeremy Hunt’s plans to discourage non-smokers from taking up vaping. Vaping products are subject to VAT at 20% but, unlike tobacco, they are not also subject to excise duty.
Transport
The £2 bus fare cap will increase to £3 until the end of next year. Single bus fares in England have been capped at £2 per journey (or £1.75 in London) for most routes since January 2023.
NHS
The NHS is expected to be granted billions of pounds to improve the health service. This includes £1.5 billion for new surgical hubs and scanners, and £70 million for radiotherapy machines.
Education
Labour plans to remove the VAT exemption and business rates relief for private schools from January 2025 to enable funding for 6,500 new teachers in state schools.
The government has also already announced £1.4 billion to rebuild crumbling schools, plus a tripling of investment in free breakfast clubs, £1.8 billion for the expansion of government-funded childcare, and £44 million to support kinship and foster carers.
Housing
Right to buy discounts for tenants of local authority-owned homes will be cut and a £500 million top-up in funding will be given to the affordable homes programme.
Labour will also launch a consultation on a five-year social housing rent settlement, seeking to cap what social housing providers can charge tenants in line with Consumer Prices Index inflation plus 1%.
A total of £128 million has also been confirmed for three housing projects: £56 million to build 2,000 homes at Liverpool Central Docks, £25 million to establish a new fund with Muse Places Limited and Pension Insurance Corporation to deliver 3,000 energy efficient homes, and £47 million to local authorities to tackle river pollution that is preventing houses being built.
Work
Labour will give £240 million to local services to get people back to work in a bid to cut the welfare bill.
