Chancellor Rachel Reeves is set to unveil significant tax changes in the Budget on November 26, with reports suggesting income tax thresholds will be frozen for an additional two years until 2030. The move could raise around £8 billion annually and comes after Reeves abandoned plans to increase income tax rates following improved forecasts from the Office for Budget Responsibility.
The Treasury is pursuing what sources describe as a "smorgasbord" approach to taxation. Potential measures include cutting the cash ISA allowance from £20,000 to as low as £10,000, capping tax-free pension salary sacrifice at £2,000 annually, and introducing a fresh levy targeting high-value properties in council tax bands F, G, and H.
Laura Purkess, personal finance expert at Investing Insiders, warned savers to act strategically but avoid panic decisions. «This Budget looks set to be a big one, with speculation rife about a number of significant changes to tax rules», she said. She advised maximizing current ISA contributions, securing top savings rates around 4.5 percent, and reviewing pension arrangements before any changes take effect.
Mounting Public Pressure
A petition demanding a special tax code for state pensioners has surpassed 10,000 signatures on the Parliament website, compelling the Treasury to respond. Timothy Hugh Mason, who initiated the petition, stated: «We want the government to introduce a new tax code for state pensioners, set at double the basic threshold.» The move comes as the full State Pension is projected to reach £12,548 annually by April 2026, approaching the current £12,570 tax-free threshold.
Helen Miller, director of the Institute for Fiscal Studies, expressed concern about the Chancellor's strategy shift. «The news that Rachel Reeves has backed away from a plan to increase the rates of income tax will lead investors to worry that the Chancellor will instead increase a range of smaller taxes that can be more damaging to economic growth», she warned. She added that perceived reluctance to make difficult decisions could cause investors «to demand higher returns when lending to the Government».
A Treasury spokesperson declined to comment, stating: «We do not comment on speculation around changes to tax outside of fiscal events.»
Note: This article was created with Artificial Intelligence (AI).
