Rachel Reeves is poised to deliver Labour’s first Budget in almost 15 years. With speculation rife over the Chancellor’s plans on tax and spending, we ask how you’re feeling ahead of tomorrow’s financial rundown
Chancellor Rachel Reeves will tomorrow unveil Labour’s first Budget in almost 15 years.
She has promised the country there won’t be any going back to austerity, but there’s already definitely some nervousness among the higher-ups about how to manage spending for Whitehall departments. Some Cabinet ministers are even skipping the Chancellor and going straight to Keir Starmer to voice their concerns about getting more funds.
In a chat with Cabinet pals, Ms Reeves made it clear there are going to be some “tough choices” ahead regarding spending, welfare, and taxes. She has also pointed out the £22 billion gap – just to keep public services from falling behind – that Labour inherited from the previous Tory government.
And, sticking to recent trends, a lot of the government’s plans have leaked to the press, fuelling all kinds of speculation about tax changes.
Tomorrow’s Budget is likely to delve into National Insurance, VAT and income tax, where Labour has stated they ‘will not increase National Insurance, the basic, higher or additional rates of Income Tax, or VAT’. The PM has since insisted the Government will “keep our manifesto pledges” so expect these rates to remain the same.
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However, Mr Starmer has given a strong signal that the Government could hike national insurance for employers in the Budget. He insisted the Labour manifesto promised not to raise taxes on “working people” but dodged questions on whether that extends to employers national insurance contributions (NICs).
Elsewhere, the government is likely to freeze income tax thresholds until 2030. Ms Reeves is also expected to confirm that stamp duty thresholds will fall in March 2025 (which was already due to happen). It will mean a house buyer will only be exempt from paying stamp duty if the property they’re buying is worth less than £125,000 or £300,000 for a first time buyer. A return to the old thresholds is expected to raise £1.8billion a year by 2029-30.
Ms Reeves is also expected to announce the end of the temporary 5p cut in fuel duty next year, which was introduced following the war in Ukraine. She is also considering hiking the tax on vaping products in a bid to tackle soaring rates of children picking up the habit.
Spending on overseas aid is expected to be cut in the Budget. There are fears Ms Reeves could cut over £2billion from the pot of money. Foreign Secretary David Lammy is among Cabinet ministers reported to be urging her not to make the cuts.
Only last week, Ms Reeves told reporters she will tweak debt rules she inherited from the Tories in order to invest billions in major infrastructure projects, such as schools, hospitals and railways.
Other topics expected to be discussed in tomorrow’s budget include inheritance tax, capital gains tax, NHS funding (the institution faces a £9billion black hole) and the two-child benefit limit and welfare spending.
What do YOU think? Are you worried tomorrow’s budget will be too harsh? Take our poll above and expand on your thoughts in the comments below.