The country is eagerly awaiting Labour’s first Budget announcement since taking office, with speculations swirling around which measures will be included. While tax hikes have been confirmed by Labour, including increases to capital gains tax, employer national insurance, and freezing income tax, there are certain tax-raising measures that are not likely to be announced.
One such measure is higher taxes on ‘working people’. Labour has been vocal about not raising taxes on “working people,” which typically includes income tax, VAT, or national insurance contributions. However, there is speculation about a possible small increase in employers’ NICs, which could indirectly impact workers’ wages. Additionally, rumors about raising capital gains tax have raised concerns, but the prime minister clarified that this would not affect his definition of “working people.”
Another topic that may not be addressed in the Budget is council tax reform. While Labour has ruled out changes to council tax bands before the election, experts suggest that adding more bands to the top of the scale could benefit higher-value properties. Reforming the council tax banding system, which is still based on property prices from 1991, could potentially save the average household £494 a year without any financial loss for the government.
A wealth tax, targeted at the very wealthy individuals with assets exceeding £10m, has been proposed by a cross-party alliance of MPs and peers. Despite calls for such a tax, Labour has previously ruled it out, emphasizing the need to grow the economy rather than rely on taxation. Wealth taxes have shown little international success, and Labour MP Torsten Bells suggested focusing on existing taxes like inheritance tax and capital gains tax instead.
‘Sin’ taxes, which are imposed on goods considered harmful, are also unlikely to be introduced in the Budget. Suggestions for a tax on unhealthy foods or increased taxes on gambling have been proposed, citing successful models from other countries. However, Labour has not hinted at implementing such measures and may opt to avoid further restrictions on personal choices, especially given recent crackdowns on smoking and vaping.
As the Budget announcement approaches, the focus remains on the tax-raising measures that are likely to be included, such as those confirmed by Labour. While there is speculation about additional taxes, including those on ‘working people,’ council tax reform, wealth tax, and ‘sin’ taxes, it is uncertain whether these measures will make the cut in Labour’s Budget on 30th October.
