Chancellor Rachel Reeves is set to unveil the government's Budget on 30 October, and rumours are swirling about what changes will be made to plug a £22bn black hole in the UK's public finances.
Prime Minister Keir Starmer admitted the fiscal plan is 'going to be painful', but Reeves says that does not mean there will be a return to austerity. Addressing the Labour Party conference in September, she said the government will make 'hard but fair' choices.
Some changes have already been announced, including scrapping the Winter Fuel Payment to the 10 million pensioners not in receipt of means-tested benefits. But talk of tax rises has intensified recently, despite the government pledging not to put up income tax or National Insurance rates.
Here, Which? sets out what's been announced so far and what else could be unveiled in the Autumn Budget next week.
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Autumn Budget rumours: what changes could be announced on 30 October?
Tax changes
The government has pledged not to increase taxes on 'working people' and has ruled out tinkering with income tax rates. It may, however, choose to make changes to the following:
- Tax thresholds: The Chancellor is considering extending the freeze on income tax thresholds beyond the current end date of 2028. Critics of the policy, introduced by the previous Conservative government, claim it has led more and more people to be pulled into higher tax bands as wages rise. This is often referred to as a 'stealth tax' but government sources told the BBC such a move wouldn't break Labour's promise not to raise income tax rates.
- National Insurance: There are suggestions the government may increase National Insurance (NI) rates for employers, after the Prime Minister was questioned about the possible move in an interview with the BBC. If it happens, firms could try to recoup the extra costs from employees. For example, a survey for the Association of British Insurers showed almost half of employers that pay more than the minimum into their workers’ pensions will consider reducing their contributions if they have to pay NI on them.
- Capital gains tax (CGT):this is charged on profits made from selling an asset, such as a second property or valuable possession. It was previously suggested that Reeves was considering increasing CGT rates to match those of income tax. The Guardian has reported that the government could hike CGT to as much as 39%. That's slightly below the 45% income tax rate paid by the highest earners.
- Inheritance tax (IHT):IHT is a tax charged on anything over £325,000 in your estate. The Resolution Foundation suggests Reeves could end some of the reliefs that help reduce the bill and abolish the nil-rate band, which allows homeowners to shield some of their wealth from IHT. A change to gifting rules, for example, could be on the cards. Gifts to family or friends are IHT-free provided the donor lives for seven years after giving. The Times reports that could be extended to 10 years.
Read our guides on inheritance tax and capital gains tax to find out more about current rates and allowances.
Cuts to pension tax perks
A couple of rumours suggest the Chancellor might announce major changes related to pensions.
The first, reported by The Telegraph, is that the government will slash the tax-free lump sum that people can take from their pensions.
Savers, from the age of 55, can currently withdraw 25% of their pension pots without a bill from HMRC, up to a maximum of £268,275. But two major think tanks, the Institute for Fiscal Studies and the Fabian Society, argue the cap favours the wealthy and claim £2bn could be raised by lowering the limit to £100,000.
It was also rumoured the Chancellor could cut pension tax relief for higher and additional-rate taxpayers, again potentially raising billions for the government, but that now appears unlikely.
The Times reports that Reeves has been warned by senior Treasury officials that such a move would be unfair to public sector workers on relatively modest incomes, including nurses and teachers.
- Find out more:tax relief on pensions explained
Council tax reform
Another area rumoured to be in line for a shake-up is council tax.
Speaking in the House of Commons on 2 September, Deputy Prime Minister Angela Rayner confirmed there are 'no plans' to raise current rates. There is talk, however, ofcuts to council tax discounts.
When pressed on whether she will make changes to the single-person discount, which reduces council tax bills by 25% for taxpayers who live alone, Rayner, who is also the Secretary of State for Housing, Communities and Local Government, refused to commit to keeping it in place.
There is also speculation that the government could overhaul thecurrent 'band' systemand replace it with a flat 0.5% tax based on the value of a home.If that were to happen, it would mean bills for some houses would fall, while others would rise.
- Find out more:what's happening to house prices?
Crackdown on spiralling insurance costs
The government pledged to tackle the problem of soaring car insurance premiums in its election manifesto, and more details could be included in the Autumn Budget.
Transport secretary Louise Haigh reiterated Labour's commitment to the issue in an interview with the Mail on Sunday on 4 August. She said the government is 'determined' to take action and added: ‘Car insurance isn’t a luxury, it’s a legal requirement and an essential for millions.’
It comes after the latest figures from the Association of British Insurers showed that despite car insurance premiums falling for the first time in two years, prices remain much higher than this time in 2023.
Tax squeeze on drivers
The ireports that Reeves is considering hiking the rate of fuel duty – a tax charged per unit of fuel purchased which is included in the price paid for petrol, diesel and other fuels used in vehicles or for heating.
The rate has been frozen since 2011 and was cut temporarily by 5p in 2022. That reduction was extended by the Conservative government in the Spring Budget 2024, but according to the Financial Times the OBR has warned that keeping rates at their current level will cost the Treasury £15bn by 2029.
Another problem facing the government is dwindling revenue from fuel duty as a result of more people transitioning from traditionally-fuelled motors to zero-emission vehicles (ZEVs), such as electric cars.
To make up for future potential losses, the government could introduce a pay-per-mile scheme that charges drivers of ZEVs for how far they travel.
Under the plan, suggested by public transport charity Campaign for Better Transport (CBT), drivers with a ZEV before the implementation date would be exempt, incentivising the switch to electric motoring.
Housing shake-up
Reeves has also signalled she will announce the following changes that will hopefully improve access to affordable homes:
- Social rent hike:theFinancial Timesreports that Reeves intends to increase annual rents on social housing in England by the Consumer Price Index (CPI) measure of inflation plus an extra 1% for the next decade.The move is meant to encourage the development of more affordable homes by providing certainty over cash flows to housing associations and councils.
- Tighter Right to Buy rules: discounts for council tenants who want to purchase their own home through the Right to Buy scheme may be slashed, reports The Times. The aim is to slow the sell-off of social housing. Tenants may also need to have lived longer in their homes before they qualify for the scheme and Right to Buy could be limited to newly built council houses only.
- Stamp duty for foreign buyers:Reeves is expected to make good on the government's manifesto pledge to increase the rate of the stamp duty surcharge paid by non-UK residents. The surcharge currently stands at 2%, but The Times reports that the Chancellor may increase it to 3%.
Tougher energy efficiency rules for landlords
During the Labour Party conference, Ed Miliband promised to crackdown on landlords that fail to meet minimum energy efficiency standards.
Under new plans, rented homes would require an energy performance certificate (EPC) rating of C. Landlords currently only need an E rating to rent out a property.
The rules, which are expected to come into force from 2030, mean many landlords would have to invest in improvements such as insulation and solar panels.
Similar reforms were introduced by the previous government, with landlords given an earlier deadline of 2028. However, the plans were scrapped by former Prime Minister Rishi Sunak.
Changes to PIP eligibility
The inewspaper reports Labour will continue a consultation initiated by the Tory government to restrict the personal independence payment (PIP).
PIP is a state benefit that helps people deal with some of the extra costs associated with long-term illness or disability and currently isn't means-tested, so it doesn't matter if you have a job or another source of income.
The consultation includes proposals to reduce the number of PIP claimants by altering eligibility criteria and assessment processes, as well as potentially replacing the current cash-based system with vouchers.
While Labour has yet to confirm if it will proceed with these specific proposals, The inotes that it is anticipated the government will explore measures to address rising welfare costs in the near future.
- Find out more: PIP benefits explained
British ISA plan to be scrapped
The British Isawas unveiled in the Spring Budget earlier this year, offering investors in UK-only stocks and sharesan extra £5,000 tax-free annual allowance, on top of the existing £20,000.
But those plans will now be torn up, according to a report by the Financial Times. The newspaper quotes a government source who claims the product was dropped because of fears it would 'complicate' the market.
The Treasury says no final decision had been made, and told Which?: 'The government will provide further information on its plans for the British Isa in due course.'
Vape tax increase
The Chancellor is expected to increase tax on e-cigarettes following the results of a consultation commissioned by the previous government and new NHS figures that show a quarter of 11 to 15-year-olds in England have tried vaping.
A tax on vapes was first announced by the previous Chancellor Jeremy Hunt and was due to come into force from October 2026.
The tax was originally designed to vary according to nicotine strength, but The Guardian reports that it might instead be turned into a flat levy on all vaping products.
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What changes do we already know about?
Winter Fuel Payment to be means-tested
The universal Winter Fuel Payment is worth up to £300 and currently paid to anyone receiving the state pension to help with heating bills.
But Reeves has said the support will be limited to those who receive pension credit or other means-tested benefits this winter.
This means millions of pensioners will lose their payment as part of an immediate cut aimed at raising £1.4bn.
The government says an estimated 880,000households are missing out on pension credit, and are encouraging people to check their eligibility and make a claim.
- Find out more:Winter Fuel Payments scrapped unless you're on benefits: here's how to get help with energy bills
Adult social care cap shelved
A plan by the previous Conservative government to cap how much people have to pay for adult social care from October 2025 will be shelved.
Reeves claims this will save the government more than £1bn by the end of next year.
- Find out more:care cap costs axed: how can you bring costs down?
State pension rise
The state pension could increase by over £460 a year, thanks to the 'triple lock'.
This policy, which the new government has promised will keep in place, dates back to 2010 and guarantees pensions will be boosted by either September’s inflation, earnings growth (from the period between May to July) or 2.5%, whichever is highest. Based on current wage growth figures, it would mean a rise of 4.1% from April 2025.
Retirees who receive the full new state pension will therefore see their payments rise to £11,962.60 for the 2025-26 tax year, up from £11,502.40 in 2023-24. Those receiving the basic state pension will rise see payments increase by £353 to around £9,167.
This story was first published on 29 July and has been updated since then as we've learned more about what the Autumn Budget might contain. The most recent update was on 24 October.