The run-ups to the last two autumn Budgets have been filled with speculation over which taxes the government will have to increase – and this year is set to be no different.

The new Prime Minister has already hinted in a recent interview that he may “ask for a bit more in tax” to fund policy plans.

At the last Budget in November 2025, taxes were hiked by £26bn, and some economists think we could see increases on a similar scale on 28 October when new Chancellor John Healey delivers his first fiscal event.

So what’s on the cards, and can you plan for it? The i Paper spoke to experts to find out.

Will taxes rise and by how much?

The Chancellor is bound by a set of fiscal rules which determine how much money they can borrow, with performance against these rules assessed by the Office for Budget Responsibility (OBR).

The headroom – the buffer against these rules – was at £22bn at the last election, but could be cut by higher borrowing costs, which means more money is going towards debt repayments, or by spending commitments.

Julian Jessop, an independent economist, said: “Unless the OBR can find a few billion under the mattress, it is highly likely that further tax increases will be announced in the Budget.

“The existing fiscal rules leave very little room for additional borrowing, even for investment, especially with UK interest rates already relatively high.”

Leading economic forecaster Capital Economics suggests tax rises up to £25bn are possible, but that if Burnham goes “really big” on spending, rises similar to the £42bn worth of hikes seen in 2024 are “not out of the question”.

Which taxes could rise?

There are a limited number of taxes that could rise at the Budget, as the Prime Minister has indicated he will stick to Labour’s pre-election commitment not to raise existing rates of income tax, VAT, national insurance on employees or onshore corporation tax. These taxes make up 54 per cent of the tax base.

Burnham has also ruled out scrapping or overhauling stamp duty and council tax, and experts have said generally, major tax reform is tricky with such a short lead-in time to the Budget.

Arun Advani, director at the CenTax research centre, said wholesale reform to taxes like business rates or capital gains tax (CGT) likely “doesn’t feel achievable” in such a short time frame.

Instead, Advani says an alternative option is to “pick off a smorgasbord of small bitty things that don’t raise much individually, but are collectively large.”

Jessop agrees, and says the Budget will likely be a “dog’s breakfast of bitty tax increases”.
Although there are hundreds of different possible tax rises, below are some of the key ones that could affect you.

• An increase to CGT tax rates. CGT is levied on gains made when an asset – like equity in a company – is sold. Rates are generally lower than income tax rates at 18 to 24 per cent. By comparison, basic income tax is 20 per cent, rising to 40 per cent and 45 per cent for higher brackets. Nimesh Shah, CEO of tax firm Blick Rothenberg, said: “Even if full alignment is considered a step too far, the Government may narrow the gap by increasing CGT rates – to say 30 per cent – reducing reliefs or tightening exemptions.”
• Pension tax changes. In recent years, there has been speculation that the government could end up cutting the size of the tax-free lump sum people can take from their pensions, which is either 25 per cent of the amount or £268,275 – whichever is lower. Shah believes this is a “sacred cow” among middle England and won’t be touched, but that pension tax relief could be. If you pay into a pension, you get relief at whatever income tax rate you pay, so higher rate payers get bigger tax relief.
• Sin taxes Jessop believes the Budget could target business sectors that Labour believes engage in “anti-social” activities. To a degree, Burnham has done this already, announcing a 20 per cent business rates cut for pubs, clubs, and small live music venues funded by reducing reliefs for stores perceived as causing social harm, specifically targeting vape shops and betting establishments. Capital Economics believes “sin taxes” on the likes of unhealthy food could raise £1bn and be a possibility.
• Wealth taxes. Though this could fall within the scope of large tax overhauls, Burnham is being urged heavily to consider changes. Compass, a cross-party campaign group headed by Neal Lawson, is fronting a new report which includes calls for wealth tax reform. Lawson is also co-founder of Mainstream Labour, the Burnham-backed faction set up in August last year. The report proposes a 2 per cent levy on net wealth above £10m, which it says would raise £24bn a year from around 22,000 people – just 0.03 per cent of the population.

What you should do now

Experts warn that people should not act on Budget speculation now.

“I think it’s important that people avoid making major financial decisions based purely on speculation about tax changes that may never materialise,” says Jason Hollands, managing director at Evelyn Partners.

“Budget rumours have a habit of taking on a life of their own, but governments frequently end up taking a different course once the fiscal arithmetic, political considerations and wider economic backdrop have all been weighed up.”

The alternative approach is to ensure you’re doing what you can with your money, on the basis of what’s the case at the moment.

Hollands says this means using your full £20,000 ISA limit – the amount you can invest or save tax-free each year, and ensuring you are using pension tax relief, to shield yourself from overpaying tax.

He also says there are changes we already know about, announced in previous Budgets, that people can plan for.

From next year, for example, the annual cash ISA allowance will reduce to £12,000 – the remainder must go into a stocks and shares ISA each year, while pensions will be included in estates when inheritance tax (IHT) bills are calculated.

“These are changes that people can and, in many cases, should prepare for,” says Hollands.

For example, with IHT on pensions, you could consider making use of the “seven-year rule”, which means no IHT is due on gifts given if you live for seven years after giving them, or you could consider setting up a trust for loved ones, which can reduce IHT.

You should consult a financial adviser before making these decisions to get a full picture of your financial circumstances.