Budget 2025: possible Autumn Budget UK tax rises explained, what they might mean for you - when is next Budget
With a big funding gap to fix, Chancellor Rachel Reeves faces tough choices 💷
- Labour’s autumn budget could bring tax rises to plug a £51bn hole in public finances
- Income tax, council tax, and threshold freezes are among the options being considered
- The Government insists taxes on “working people” won’t rise – but pressure is mounting
- Property owners and higher earners may face the biggest changes
- Final decisions will be announced in the budget, expected late October or early November
The second budget under Labour Chancellor Rachel Reeves is expected in October, and all eyes are on whether she will break a key manifesto promise not to raise taxes for working people.
Now, leading economic think tank the National Institute of Economic and Social Research (NIESR) has warned that unless the Government finds new revenue streams or slashes spending, such tax rises may be inevitable.
NIESR says Reeves faces an “impossible trilemma” in meeting her own, self-imposed ‘fiscal rules’, keeping spending promises and honouring tax pledges, all while dealing with sluggish economic performance and higher-than-expected borrowing.
Their analysis suggests Reeves is on track to miss one of her fiscal rules by over £41 billion by 2029-30.
To get back on track, it estimates the Chancellor needs to find over £51 billion, which could require either spending cuts or “moderate but sustained” tax increases, despite Labour’s manifesto commitment not to raise income tax, VAT, or national insurance.
Which taxes could go up?
The Government has said it has no plans to introduce a wealth tax - a levy on the total value of a person’s assets, rather than on their income - but speculation is mounting that other measures could be on the table.
These could include a reform of income tax; NIESR suggests that raising both the basic and higher rates of income tax by five percentage points would be enough to plug the gap. This would directly hit take-home pay for millions.
Elsewhere, extending the freeze on income tax thresholds beyond 2028 could raise £8.2 billion, but would still leave a major shortfall. NIESR also recommends overhauling outdated council tax bands or replacing the system entirely with a land value tax.
What has the Government said?
Prime Minister Sir Keir Starmer has insisted the focus of the autumn budget will be on “living standards”, not tax rises.
He said the Government has already helped ease the pressure on households through wage increases and lower interest rates, and that people are “starting to feel better off”.
Asked whether Labour remains committed to avoiding tax hikes, Starmer avoided giving a direct answer, but said all decisions would be made once the autumn forecast is received.
Downing Street sources later reiterated that Labour stands by its pledge not to raise taxes on working people.
Meanwhile, Culture Secretary Lisa Nandy said the Chancellor has “poured cold water” on the idea of a wealth tax, pointing out it has failed in other countries and would go against Labour’s promise to ease the burden on workers.
What could it mean for you?
If you’re a working person, Labour insists your income tax, VAT, and national insurance contributions won’t rise.
But that could change if Reeves decides the fiscal challenge is too great to meet without revisiting those pledges.
If you’re a homeowner or landlord, property tax reform could be on the horizon. And if you’re among the UK’s wealthiest households, capital gains or inheritance tax tweaks might be considered – even if an outright wealth tax is off the table.
Either way, the autumn budget looks set to be a pivotal moment. With public services stretched, inflation still high, and fiscal rules to meet, the decisions Reeves makes will shape not just the economy, but your monthly budget, in the months and years ahead.
When is the Autumn Budget?
The Autumn Budget 2025 has not been officially scheduled yet, but following tradition, it is most likely to be delivered in late October or early November 2025. It is broadly expected to fall between October 28 and November 4.
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