The Labour Party government is poised to introduce significant tax increases in the upcoming Autumn Budget, potentially costing high earners in the UK up to £8,309. Reports from The Telegraph indicate that one of the three main taxes—income tax, council tax, or ISA allowances—is almost certain to rise.
Rachel Reeves, addressing the nation, emphasized the careful balancing act she faces: “As I take my decisions on both tax and spend, I will do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity, and to ensure that the economy we hand down to future generations is secure with debt under control.”
Key potential changes include a council tax increase that could add £2,500 annually for those earning £125,000 or more. Similarly, an increase in income tax could add another £2,503 to the tax burden for higher earners. Additionally, cuts to the tax-free Cash ISA allowance may cost individuals £214 a year.
READ MORE: Millions of Women May Need to Work Until 86 to Match Men’s Pension Wealth
READ MORE: Major UK Fashion Retailer SilkFred Will Not Issue Refunds Following Administration Collapse
For example, nearly 125,000 pensioners paying additional-rate income tax who normally invest £10,000 into tax-free accounts could see their returns adversely affected. If they instead moved these funds into one-year bonds at current top interest rates of 4.55%, they would earn £455 annually. However, with a 45% tax rate, this income would attract a £205 tax bill, which would rise to £214 if the top rate increases to 47%.
The government may also increase council tax on the highest bands, with the top band potentially rising to £5,342. EV owners could face new charges as well, such as a pay-per-mile car tax at 3p per mile, which might add around £250 in costs annually.
A spokesman for the Labour Party and Treasury stated, “The Chancellor has set out the context for the Budget, recognising global and long-term economic challenges. It will continue to build the strong foundations to secure Britain’s future and focus on the priorities of the British people – protecting the NHS, tackling the cost of living, and reducing national debt.”