As the 26 November budget nears and speculation builds, it can be difficult to know whether to take action ahead of the Chancellor’s announcements.
The National Institute of Economic and Social Research (NIESR) has forecast a £41.2bn deficit by 2029/30, suggesting the government may need to raise billions through tax increases, spending cuts or additional borrowing. To remain within fiscal rules, the think tank has advised a ‘moderate but sustained increase in taxes,’ with substantial adjustments likely.
Despite several think tanks suggesting otherwise, the government has so far been steadfast in its commitment to its manifesto promise not to raise taxes on working people, and the Chancellor recently reiterated this stance so it seems unlikely that changes to any headline rates of tax (such as Income Tax, National Insurance and VAT) will be made. However, revenue will need to be raised one way or another, so possible areas of focus could include changes to tax reliefs and thresholds such as those on pensions taxation, an extension to the freeze on Income Tax thresholds, or potentially further changes to Capital Gains Tax (CGT), IHT, Dividend Tax or business owner reliefs.