Six big changes expected from Reeves’ budget and how they’ll affect your finances

chancellor Rachel Reeves The scene has been set for Tax it rises in autumn Budget On 26th November and to all homeowners Pension savers may be in their sights.

high inflation And an estimated £30 billion fiscal deficit is putting pressure on the government and ultimately the country’s finances.

Reeves said in a speech at Downing Street earlier this month that “each of us must do our bit to ensure the security of our country and the brilliance of its future”.

This is seen as a sign Tax emerges, especially when the Chancellor suggests that she has to “deal with the world as I think it is, not the world as I want it to be”.

The rumor mill has been running for months and with only two weeks left until the latest fiscal update, here are the major policy changes expected Budget And how they can affect your finances.

income tax increase

When the Labor Party came to power last year, its main manifesto was that it would not increase National Insurance (NI), income tax or VAT.

Reeves has already increased employer NI contributions in his 2024 budget and now it is expected that income tax rises are also on the way.

There are rumors that the Treasury is considering an idea from the Resolution Foundation to raise income tax by 2p and reduce workers’ NI by the same amount, which the think tank says could raise £6bn and hurt higher earners more than what Labor describes as “working people”.

But Sarah Coles, head of personal finance at Hargreaves Lansdown, said it would also affect self-employed people who pay income tax but not employee NI.

She said: “They pay NI, but at a different rate to a different class, so they pay 6 per cent on profits from £12,570 to £50,270 and 2 per cent on profits over £50,270. By only cutting NI for the employed, the system will place a greater burden on the self-employed.”

Commentators have also speculated that the Chancellor could add 1p to the basic rate of tax, raising it from 20 per cent to 21 per cent.

Laura Suter, director of personal finance at AJ Bell, said it would cost taxpayers up to £377 a year in extra tax, with anyone earning £50,270 or more facing the maximum hit.

He said: “While it is possible that income tax rates could be increased across the board, higher and additional rate taxpayers already have a disproportionate share of the income tax burden. What’s more, increasingly aggressive rates risk discouraging people from taking up promotions and advancing their careers.

“It is easy to cast the basic rate rise as a shared burden because it affects almost all workers, as well as pensioners and some savers.”

Strictness on pension allowances

Reeves announced last year that pension savings would form part of the estate for inheritance tax calculations from 2027.

There is always speculation about this Ban on pension tax relief For higher earners, but the latest rumors suggest the Chancellor could reduce the amount of tax relief workers get from contributing to their pensions through salary sacrifice.

It has been suggested that such a move could mean the average employee could be hit by up to £210 a year.

Antonia Medlicott, managing director of Investing Insiders, said: “The Chancellor risks undermining confidence in the system, which could put people off saving or push higher earners towards riskier products as they look for alternative ways to save tax.”

mansion Tax

A The mansion tax is popular with many Labor MPs And this was a party policy under former leader Ed Miliband.

Reeves had previously ruled out a mansion tax as shadow chancellor.

But there are now rumors that an effective mansion tax could be introduced by imposing a council tax on house sales above £1.5m or a 1 per cent annual levy on properties worth more than £2m.

According to Knight Frank’s calculations, more than 150,000 properties in England and Wales would be worth £2 million today, mainly around London.

property tax reform

Many home buyers will be hoping for changes to stamp duty, especially after the threshold increased in April and the cost of purchasing a property increased.

Tory leader Kemi Badenoch announced in her party conference speech that Reeves would also face pressure on property taxes if the Conservatives return to government.

This seems unlikely given the high level of income provided by the tax for the Treasury, but there are rumors that stamp duty on home sales above £500,000 could be replaced by a new national property tax, shifting the cost from buyers to sellers.

Figures from Rightmove show that less than a third of homes for sale in England are priced at more than £500,000 and would be subject to the proposed new annual property tax.

But this will again have the worst impact on London, where 59 per cent of listings have an asking price of more than £500,000, compared to just 8 per cent in the North East.

Johan Swanström, chief executive of Rightmove, suggests passing the burden of stamp duty onto the seller could be good for first-time buyers, although higher asking prices could offset any savings.

He added: “If the onus of property tax shifts in favor of sellers, the government will really need to think about how this change will be phased in to avoid slowing down the market at large. People who have recently paid stamp duty as buyers and will have to pay property tax as sellers in the future will clearly be at a disadvantage.”

Reeves is there too Rumor has it that changing council tax is being considered. With an annual new percentage charge on the value of the property – capped at a minimum of £800.

landlord tax

Homeowners are already facing Additional Terms from the Tenant Rights Act And were hit by higher stamp duty charges in the last budget.

Another tax hit could be coming for landlords as the Treasury is now rumored to be considering charging NI on rental income.

Ben Beadle, chief executive of the National Residential Landlords Association, said: “The private rented sector is an important driver of labor and social mobility. It enables people to move into work, access higher education and take advantage of new opportunities – everything the government wants to promote as part of its growth agenda.

“Instead, landlords are facing further speculation about tax hikes that will hinder investment, reduce supply and ultimately drive up rents.”

isa reform

Reeves is keen to promote investment in the UK and British shares.

One way to do this might be to cut it cash isa Allowance to encourage more money to go into Stocks and Shares ISAs, although there is no guarantee that this will mean investing in British companies.

There are reports that £12,000 cash isa A limit may be introduced, effectively halving the allowance.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “This will be sad news for hard-working savers. If they are saving for the short term, cash is the right home for their money, so they will be forced to pay more tax through no fault of their own.

“If they have a longer time frame and they’re still in cash, they’re not investing yet. It has nothing to do with taxes.”

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