Millions of UK households are facing a potential tax raid later this month as Chancellor Rachel Reeves prepares to deliver her first Budget.
Budget Announcement Imminent
Chancellor Rachel Reeves will announce her long-awaited Budget on November 26, with families having just over two weeks to discover how their finances will be affected. The Chancellor has heavily hinted she will be increasing taxes in some form, despite concerns this could break a Labour manifesto pledge.
Tax Changes Targeting Pensioners
Reports suggest the government is considering hiking income tax while simultaneously cutting National Insurance. This approach would particularly target pensioners while attempting to protect working people. Finance expert Karen Barrett, founder of Unbiased, commented: "The speculated hike in income tax and cut in national insurance reveals how Chancellor Rachel Reeves is trying to avoid piling more tax onto working people, but this burden may be felt by landlords and pensioners."
She further explained that cutting national insurance might only benefit basic-rate taxpayers, particularly those earning under £50,270 annually. Higher and additional-rate taxpayers would not benefit from the NI reduction while facing increased income tax bills.
Political Consequences and Backlash
Ms Reeves has been under significant pressure to find ways to raise money while limiting political damage. Labour would expect a substantial backlash from opponents and media sections should they decide to increase income tax after previously promising not to. The Chancellor has been preparing the ground for potential tax rises in recent interviews, insisting she will do what is necessary for the country.
Prime Minister Keir Starmer maintained last month that "No Prime Minister or Chancellor will ever set out their plans (for the Budget)" in advance, keeping the nation in suspense about the final decisions.
