The Autumn Budget will be delivered on 26 November, but the Chancellor’s recent speech in Liverpool gave us some useful hints about what could be on the table.
The Chancellor Rachel Reeves appeared to prepare the ground when she said: “We will face further tests, with choices to come, made all the harder by harsh global headwinds and long-term damage to the economy, which is becoming ever clearer.”
Her comments note two factors:
- Global headwinds – trade tensions, wars and higher interest rates driving costs up.
- The UK’s own productivity problem – the Office for Budget Responsibility (OBR) is due to publish a critical reassessment of the long-term productivity performance of the UK economy.
In short, the message seems to be: don’t be surprised if taxes rise, and don’t expect giveaways.
How might taxes be raised?
It looks as though there will be no change to the main tax rates (Income Tax, National Insurance and VAT). When pressed on whether VAT could rise, the Chancellor said: “The manifesto commitments stand.” She further said that she wants to protect pay packets and “not put up the prices in shops” – which also makes a straight VAT rise unlikely. But she hasn’t ruled out changes elsewhere.
One option for raising money without headline rate rises is to keep tax thresholds frozen. As wages rise with inflation, more people and businesses get dragged into higher tax bands.
Pensions, housing-related tax breaks, and other business reliefs could also be reviewed. The government may frame these as closing “loopholes” rather than introducing new taxes.
Reeves has also confirmed that there could be changes to the legally required biannual forecasts carried out by the OBR. When the mid-year OBR forecasts don’t meet expectations, the resulting speculation about tax changes can lead to wider instability. These forecasts might now only happen once a year, which could help with this.
What this could mean for you
We won’t know the detail until the budget is delivered at the end of next month. But this Budget is unlikely to bring windfalls for business – it looks like it could be more about stability and plugging gaps in public finances.
As ever, preparation is key. Keep an eye on the announcements and be ready to adapt. We’ll be keeping you informed with details of what’s changed following the Budget. As ever, if you would like any personalised advice please give us a call. We would be happy to help you!