Having revealed that there is a £22bn hole in the public finances, Chancellor Rachel Reeves has warned of a “difficult decision” on tax in the Budget on October 30. While Labour has ruled out increases in income tax, National Insurance and VAT, it has been suggested that ministers may target inheritance and capital gains taxes. James Smith, research director at the Resolution Foundation think-tank, said Ms Reeves was facing tough choices on further tax rises or spending cuts in the Budget. He warned that any new tax rises “would add to the £23bn a year in tax increases announced, but not yet implemented, by the previous Government.” Meanwhile, the Government has confirmed that a manifesto pledge to charge 20% VAT on private school fees will begin in January 2025. Officials also confirmed plans to replace non-domiciled tax status with a new residence-based regime from April 2025. Meanwhile, a windfall tax on the profits of energy and gas companies will rise by 3% from November. Ministers have also told private equity firms that they have until August 30 to offer input that will inform its reform of private equity taxation.
