National insurance, capital gains, corporation tax: what could we expect from Reeves' first Budget?
By Politics Producer Maya Bowles
On Wednesday 30 October, Chancellor Rachel Reeves will deliver her first Budget.
It marks a key moment for the new Labour government, as Reeves tries to balance the government's promises on taxation with a commitment to keep borrowing under control and avoid a return to austerity.
Since Labour won the election in July, government ministers have repeatedly talked about the £22 billion "black hole" in the public finances left by the previous government.
But last week the Institute for Fiscal Studies warned that up to £25 billion in tax rises would be needed to fulfill Reeves' promise of "no return to austerity".
Rumours have been swirling about which taxes the chancellor might choose to put up - with a focus particularly on a hike to employer National Insurance, which neither Reeves nor Prime Minister Sir Keir Starmer have denied.
The Labour manifesto promised not to raise taxes for "working people", ruling out a rise in National Insurance, income tax and VAT.
But which other taxes rises could be announced ?
Employer National Insurance
The main focus of Budget speculation has been on employer National Insurance contributions, as the PM and chancellor have both signaled a hike is on the cards.
The key question is whether this would break Labour's manifesto promise not to raise taxes for "working people".
The PM has suggested it wouldn't, but business groups say an increase in employer NI would be a "clear manifesto breach", placing "an additional strain on businesses".
They argue a rise would impact working people as employers could restrict new hires, limit pay rises, scale back pension payments or even put up prices for customers.
Employers currently pay 13.8% on earnings above £175 a week, or £9,100 a year per person, under Class 1 NI contributions. It's deducted and set aside for HMRC before wages are paid out.
A one percentage point increase in the Class 1 rate could raise £8.45 billion over the 2025 to 2026 tax year, and a two percentage point hike could raise £16.9 billion, according to data compiled by HMRC and EY.
Pension taxation
There has also been speculation that the government is considering introducing National Insurance tax on employer pension contributions as a way of raising additional revenue.
Currently employers don't pay NI contributions on payments they make into their employees' pensions.
The Institute for Fiscal Studies calculate introducing NI on employer pension contributions could raise around £17bn per year if taxed at the same 13.8% rate as normal employer NI contributions.
The PM and Reeves have not ruled out this option either.
Reeves is also rumoured to be considering changing the rate of pension tax relief to a flat rate of 30% - pensions are currently taxed at either 20, 40, or 45% depending on which income tax bracket the worker falls into.
Capital gains tax
Capital gains tax is paid by around 350,000 people, which is less than 1% of the population.
It's the tax levied on any profit when someone sells an asset worth more than £6,000 - like a second home, or shares.
The CGT rate is 10% for profits above £3,000, or 18% on profits from selling a residential property other than a main home.
The higher rate of CGT is 24% on residential property and 20% on all other chargeable assets.
There had been speculation of an increase to 39% for the higher rate, which the PM described as "wide of the mark" in an interview with Bloomberg on Monday.
CGT raises around £15bn a year, according to the IFS. Estimates by HM Revenue and Customs show a 1 percentage point increase in the higher rates of capital gains tax would raise £100 million in 2027-28.
Corporation tax
Corporation tax is paid by UK companies on the annual profits a company makes - the current main rate is 25%.
Rachel Reeves confirmed during her speech at the government's International Investment Summit on Monday that she will cap corporation tax at 25% for the rest of the parliament.
"At the budget, this government will be outlining a corporate tax roadmap. We will cap the rate of corporation tax at 25 per cent, the lowest in the G7, for the duration of this parliament", she told business leaders.
Inheritance tax
Inheritance tax is paid on someone's estate when they die - it includes their property and other assets, but not if the value is below £325,000.
It's currently taxed at 40%, but only on the part of the estate above the threshold.
The number of people who pay inheritance tax is very small - last year only 5% of estates were charged an inheritance tax bill, and there are also quite a lot of exemptions.
A number of organisations have called on the chancellor to reform inheritance tax in order to get rid of some of the loopholes.
The think tank Demos have suggested a new banded inheritance tax system, urging Reeves to cut the amount for less valuable estates and increase it for the wealthier ones.
Fuel duty
Fuel duty on standard petrol and diesel is currently 52.95p per litre, after the Conservatives cut it by 5p in 2022.
It's expected to raise £24.7 billion in 2023-2024 according for the Office for Budget Responsibility.
If the Labour government reversed the 5p cut they would raise around £2bn.
Changing fiscal rules
The government have also signaled they are considering whether to change their fiscal rules.
Fiscal rules are guidelines a government sets which regulate how much it can borrow and spend.
Reeves has signaled she could change how debt is calculated in order to allow her to borrow more for public investment.
“It’s time that the Treasury moved on from just counting the costs of investments in our economy, to recognising the benefits too,” she told the Labour conference last month.
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