4 Ways Rachel Reeves's Upcoming Budget Could Affect You

Rachel Reeves is set to unveil her highly-anticipated tax and spending plans in her Budget at the end of this month, in a moment set to rock Westminster.

The chancellor has try and find at least £30 billion to plug the looming black hole in the public finances, while not making Labour even more unpopular with voters.

But, as economic growth remains lacklustre – official figures revealed on Wednesday the economy grew by just 0.1% in the third quarter of the year – Reeves is expected to hike taxes to try and get the country’s finances back on track.

It was revealed last night that Reeves had dropped her controversial plans to hike up income tax, leaving many wondering how she will try to fill that black hole on November 26 instead.

So here’s a look at what the main rumours could mean for you and your finances.

1. A crackdown on pensions

Reeves is expected to squeeze pensioners – who don’t pay national insurance – by freezing income tax thresholds.

Consultancy LCP predicted that the average pensioner who has annual taxable income of £19,023 may end up paying £380 more per year in tax.

Meanwhile, the top 25% of pensioners who have at least £23,039 in taxable income may end up paying at least £460 per year.

That could hit at least nine million pensioners who currently pay income tax on their retirement savings, according to the consultancy firm.

Reeves could also limit the amount of savings that can be deposited tax-free by going after salary sacrifice pension schemes by forcing employees to pay the full rate of national insurance on those savings.

The Times reported that could mean a £240-a-year pay cut for workers paying in 10% of their salary to the programme – and raise up to £2 billion a year for the government.

2. Property tax reform

The thresholds for stamp duty already increased in April this year, meaning the cost of buying a home went up.

But Reeves is facing pressure to reduce this, especially after Kemi Badenoch declared she would drop stamp duty altogether if the Conservatives were in government.

The chancellor could be replaced with a new national property tax on home sales over £500,000 – a move which would impact approximately a third of homes for sale in England, mostly in the south east.

3. Landlord taxes

Landlords are likely to be hit by the Budget with an increase of national insurance contributions on rental income, affecting their profits.

According to estate agents the Hamptons, landlords could see their tax bill double, if Reeves slaps 8% national insurance contributions on rental profits up to £50,270.

An additional 2% NIC could be applied on rental profits above that.

The Hamptons said: “Our analysis shows that a typical landlord earning £16,478 annually in rental income and paying £7,875 in mortgage interest would see their tax bill more than double - from £699 to £1,609.”

4. Mansion tax

Though Reeves ruled out a mansion tax when she was shadow chancellor, there’s growing speculation that she may be looking to charge council tax on the sale of homes above £1.5m.

She could also charge a 1% annual levy on properties worth above £2m.

More than 150,000 properties in England and Wales would fall into this category, according to the estate agency Knight Frank.