All of the taxes that might increase in Rachel Reeves’s Budget next week

All of the taxes that might increase in Rachel Reeves’s Budget next week Isabel Fraser and Daisy Outram Published November 23, 2025 8:00am Share this article via whatsappShare this article via xCopy the link to this article.Link is copiedShare this article via facebook Comment now Comments Rachel Reeves will outline tax increases and spending cuts in the Autumn Budget next Wednesday (Picture: Leon Neal/Getty Images)

Questions about rumoured tax rises will be answered next week at this year’s Budget when it is delivered by Rachel Reeves on Wednesday.

The Chancellor will be outlining key decisions on taxes and changes to public service spending, such as for the NHS, schools and the police.

Previously the Labour Party promised in its manifesto to not raise income tax, National Insurance or VAT on ‘working people’.

But doubts have been cast on this commitment since Starmer and Reeves have failed to rule out tax rises in recent comments and the government has stressed the dire financial situation at play.

Rachel Reeves previously delivered her Spring Statement to the House of Commons in March this year and vowed to enact ‘national renewal’ (Picture: via REUTERS)

What time is the Autumn Budget and when does it come into effect?

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Rachel Reeves will deliver the Budget in the the House of Commons on Wednesday, November 26 at around 12.30pm. The statement will come just after Prime Minister’s Questions and last for roughly an hour.

The announcement is made to MPs and Kemi Badenoch, the Leader of the Opposition, will give a response immediately afterwards.

After Reeves’s statement, the government will have to introduce and pass a Finance Bill to enact their policies. It will have legal effect once the bill gains Royal Assent, which for the Autumn Budget last year happened in March 2025.

Changes usually come into place for the following tax year starting in April.

What does Reeves want for the Budget?

Reeves will have to make up a significant amount of money to stick to her own government finance rules (Picture: Wiktor Szymanowicz/Future Publishing via Getty Images)

The government needs more money to put Reeves on course to meet the ‘rules’ that she described as ‘non-negotiable’ after becoming Chancellor:

1. No borrowing to fund day-to-day public spending by the end of this parliament.
2. To decrease government debt as a share of national income by the end of this parliament.

Economic think tank the Institute for Fiscal Studies (IFS) has suggested this means Reeves will need a ‘tightening’ of £22billion to restore the headroom she gave herself at this year’s Spring Forecast.

But the Treasury has indicated the Chancellor feels that headroom was too small and she wants to give herself more this time round.

Reeves has made it clear she does not want a return to austerity and government debt is already too high, which seems to leave tax rises as the only means of bringing in the dosh.

Are taxes going to go up in the autumn Budget?

The IFS said Reeves will ‘almost certainly’ have to raise taxes in order to bring in funds to keep her economic targets.

On top of this, the Chancellor has said that she wanted to make sure the UK had ‘sufficient headroom’ to prepare for any future finance shocks at a gathering of business leaders in Saudi Arabia.

This suggests the £9.9billion buffer she passed in last year’s Budget was not enough, making it even more likely that we will see tax increases.

Property Tax

Stamp duty and other property taxes are predicted to see some of the most significant change as the Labour government has repeatedly ruled out raising income tax, national insurance or VAT – more on that later.

It has been rumoured that the government may replace stamp duty, the tax that buyers pay on properties above a threshold value in England and Northern Ireland, with a property tax.

Capital gains tax (CGT) is a charge applied to the increase in the value of an asset when you sell it. Main homes are currently exempt, but it applies to sales like stocks, shares, artwork and second homes.

Changes to property tax are expected next week (Picture: Bloomberg via Getty Images)

The Times have said that government is considering introducing CGT for pricier homes. This is despite Keir Starmer ‘absolutely’ guaranteeingbefore last year’s election that capital gains taxes would not be put on primary home sales.

A potential ‘mansion tax’ would aim to raise £600million and could apply to 1,300,000 families, particularly in areas with higher house values.

The BBC reported that landlords may also be required to pay National Insurance (NI) if being a landlord is their main job, they rent out more than one property or they are buying new properties to rent out.

A focus on landlord taxes may be particularly awkward for the Chancellor, after she faced calls to resign last month over failing to apply for a licence for renting out her family home in London.

Income Tax, National Insurance and VAT

The big question for the Autumn Budget is if Labour will break a key manifesto pledge – that they would not increase income tax, NI or VAT.

Those three taxes are the biggest potential moneymakers for the Treasury, and the daunting fiscal challenge likely facing the Chancellor means she may decide they need to break the commitment.

Reeves raised speculation in October by saying the Labour government would work to keep taxes on working people ‘as low as possible’.

This speculation has gone into overdrive at PMQs where Keir Starmer did not rule out raising these taxes as he has done in the past when asked about them by Kemi Badenoch.

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The same happened in Reeves’s unusual Downing Street speech on November 4 where she said the government would make ‘necessary choices’ and did not rule out tax rises in the Budget.

But there is still a chance the government just wants to keep expectations low so they get extra credit if they do not end up breaking the pledge.

Some Westminster chatter had also suggested Reeves would increase income tax by 2p while cutting National Insurance by the same amount to argue that technically taxes haven’t been raised on working people.

However, the Chancellor appeared to U-turn on this speculation and will keep income tax rates frozen for two years. According to the Financial Times, she had been swung by better than expected OBR forecasts.

Pension Tax

It has been suggested that Labour may lower the cap on tax-free cash that can be taken from pensions (Picture: Christopher Furlong/Getty Images)

Rumours have surfaced that the government plans to further restrict the 25% tax-free cash that can be taken from pension pots once people reach the age of 55.

That measure was expected from last year’s Budget, but never happened.

The government may also limit how much can be contributed to a pension fund without paying NI to a £2,000 cap. This is for workers investing in their pensions under ‘salary sacrifice’ schemes at work.

According to The Times, the plan to limit tax-free pension contributions hopes to raise £2billion.

Inheritance Tax

There were some complicated long-term Inheritance Tax changes set out in last year’s budget, which could be expanded.

They included the plan to impose Inheritance Tax on agricultural assets from April 2026.

The unused value of person’s pension funds will be also added to the cost of their estate for the rate of Inheritance Tax from April 2027.

Tax on EV Drivers

Despite encouragement for more people to switch to electric vehicles, a tax equivalent to fuel duty may be announced for electric cars (Picture: Anna Barclay/Getty Images)

Drivers of petrol and diesel vehicles currently pay fuel duty when they fill up at the pump and the tax is expected to bring in £24.4billion for the Treasury this year.

But there’s one problem for the government – the sale of petrol and diesel cars will be phased out from 2030 as drivers are encouraged to drive electric vehicles (EVs) instead.

The Daily Telegraph has reported Reeves could announce a pay-per-mile tax for EVs at the Budget.

A government spokesperson said: ‘Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles.

‘We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we have invested £4billion in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.

‘Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.’

There are government grants to buy EVs on 39 models and infrastructure rules are being overhauled so that more charging points are available for EV drivers at their homes and in public.

Wealth Tax

Protesters have called for tougher taxes on the super-rich and big corporations (Picture: Thomas Krych/ZUMA Press Wire/Shutterstock)

There are many calls for Labour to increase taxes on the UK’s most wealthy, but there is no party-wide agreement on the idea.

It could take the form of an annual charge on people with assets exceeding a certain threshold.

The group Patriotic Millionaires UK has called on the Chancellor to raise taxes on ‘the super-rich’ as a non-partisan network of millionaires themselves with backgrounds in a variety of industries.

Reeves has said that Britain does not need ‘a standalone wealth tax’.

Will the budget address the cost of living crisis?

It has been suggested that the Budget may outline a decrease in VAT on energy bills and an end to the two-child benefit cap (Picture: Shutterstock / Ascannio)

The Chancellor has told the BBC earlier this month that she would ‘take targeted action to deal with cost-of-living challenges’, particularly as inflation remains high.

Reports since have suggested the government could decrease gas and electricity bills by cutting the current 5% rate of VAT charged on energy, or by reducing regulatory costs enforced by suppliers.

Starmer and Reeves have also been hinting at an end to the two-child benefit cap in the Budget, which currently means families cannot claim Universal Credit or Child Tax Credits for more than two children.

Campaigners have said the move could lift 350,000 children out of poverty, while Reeves has said kids ‘should not be penalised because their parents don’t have very much money’.

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However, the Chancellor has also announced she may strip young people of benefits if they refuse a job.

This is part of plans to tackle unemployment, so young people who have not worked for 18 months will be guaranteed jobs or be stripped of benefits if they do not take up the offer.

In the spending review, Reeves also outlined an extra £2.2billion for defence. This significant spend will likely be clarified in the Budget.

How could the budget affect Labour’s prospects?

Prime Minister Keir Starmer and Chancellor Rachel Reeves have both faced political challenges recently (Picture: REUTERS)

The Autumn Budget comes at a time of difficult economic and political circumstances for the government.

Breaking manifesto pledges on tax rises will risk damaging trust in the government, whilst not raising enough money may require unpopular cuts in spending on public services.

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Recent controversy around Reeves’s alleged rule-breaking as an unlicensed landlord put Labour in peril, but Starmer said he still has ‘full confidence’ in Reeves. Their political goals and prospects are clearly bound up together.

At the most recent PMQs, Conservative leader Kemi Badenoch criticised that changing narratives around income tax plans showed the Budget was the first ‘to unravel before it’s even been delivered’.

The government also face challenges within the party, with calls for the PM to be replaced by Mayor of Manchester Andy Burnham returning this week and new deputy leader Lucy Powell saying they had to do better to ‘offer the big change the country is crying out for’.

The Budget will be a vital test of financial responsibility and party unity for Labour at a time 79% of Brits think the economy is in a bad state and 77% say the government is doing poorly at managing the economy, according to recent YouGov polling.

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