Reeves is under pressure to plug a £22bn budget hole she says was left by the previous Conservative government, according to the Resolution Foundation think tank. However, her hands are tied by Labour’s promises not to raise a number of major taxes, including income tax and VAT.
Experts have concluded that reforming inheritance tax, which removes corporate and farming profits and taxes pension savings, would raise £2bn. Aligning capital gains tax on shares with tax rates on dividends and tax on property income such as wages, while restoring indexation for inflation, would raise up to £12bn. A further £9bn could be raised by removing National Insurance relief for employers’ pension contributions to employees.
The House of Commons is also expected to vote soon on plans to scrap winter fuel subsidies for all but the poorest pensioners. Prime Minister Keir Starmer hopes the planned rise in the state pension will stave off protests.
