Rachel Reeves: what could be in her Budget?

The UK’s first female Chancellor, Rachel Reeves, will deliver the Labour government’s first Budget this autumn. We look at what could be announced

Rachel Reeves enters 10 Downing Street following Labour's landslide election victory on July 5, 2024 in London, England
Rachel Reeves will deliver Labour's first Budget in a few months' time
(Image credit: Getty Images)

Rachel Reeves is set to deliver her first Budget this autumn. It will be the first Labour Budget for 14 years. 

It will also be the first Budget announced by a female chancellor, after Prime Minister Keir Starmer gave Reeves the top Treasury job in his cabinet

In her first speech as Chancellor, Reeves declared that “economic growth is the number one mission of the Labour government” in a bid to fix Britain.

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She added that the government’s “new economic model would keep taxes, inflation and mortgages as low as possible”.

While Reeves pledged to "get Britain building again" by bringing back compulsory housebuilding targets, there was little detail about how a Labour government would affect people’s personal finances.

That information will be included in the autumn Budget. We don’t know the exact date of the fiscal event yet, but Reeves promised to reveal the date before the end of this month (July).

We look at what could be announced.

What could be in Rachel Reeves’s Budget?

The Budget - also known as the “red box” - is likely to contain information about some of Labour’s manifesto pledges, but could unveil other policies too.

Private school fees

Labour previously said it would add VAT to private school fees from September 2025, meaning costs could increase by up to 20%.

According to calculations by Hargreaves Lansdown, the average fees for a private secondary school over seven years are likely to cost a total of £140,552, with 3.5% annual inflation factored in. 

However, if schools add VAT to this, it would push up the seven-year bill to £168,633.

Reeves may use her first Budget to commit to the policy and reveal further detail. For example, we could see anti-forestalling legislation introduced to prevent parents paying fees in advance to avoid the 20% VAT charge.

State pension triple lock

A commitment to the state pension triple lock was an important manifesto pledge, and Reeves may reaffirm Labour’s position on Budget day.

The triple lock means the state pension rises each April in line with inflation, average earnings or by 2.5% - whichever is higher.

“While pensioners will continue to get decent increases to their state pension, they may face more tax. That’s because Labour did not promise to shield the state pension from income tax in the same way as the Conservatives have with the so-called ‘triple-lock plus’ pledge,” says Laura Suter, director of personal finance at the investment platform AJ Bell.

“It means that more pensioners could face tax on their retirement income, thanks to frozen tax bands.”

Pension review

The Budget could have a wider impact on people’s retirement savings.

The Labour manifesto said a “review of the pensions landscape” would happen, “to improve pension outcomes and increase investment in UK markets” - so Reeves could use the Budget to launch this review.

The review could mean a continuation of the “Mansion House” agenda started by former Chancellor Jeremy Hunt

This aims to boost the amount of capital that pension schemes invest in UK companies, particularly high-growth private companies.

But a pension review could also cover how our retirement savings are taxed. If so, we could see a change to the amount of pension tax relief savers receive, or to the 25% tax-free cash that retirees typically receive.

Pension savings are usually exempt from inheritance tax, but this could also come under the spotlight with a Labour government.

The “pot for life” pension reform may be included in the Budget too.

Freedom to Buy

Labour’s flagship housing policy is the Freedom to Buy scheme

The party has pledged to help get 80,000 people onto the property ladder over the next five years, by making the current mortgage guarantee scheme – due to expire next June - permanent.

Myron Jobson, senior personal finance analyst at the investment platform Interactive Investor, comments: “Many first-time buyers will be waiting with bated breath to see whether the pledge to make permanent the mortgage guarantee scheme designed to ensure low-deposit mortgages will see the light of day, and, if so, how quickly it will be rolled out.” 

Stamp duty

Labour confirmed before the election that, if it forms the next government, the first-time buyer stamp duty exemption threshold would drop back to £300,000.

The threshold was raised in September 2022 from £300,000 to £425,000 and was due to be reversed in April 2025.

Reeves may mention this in the Budget, and possibly other changes to stamp duty. The exact changes will depend on whether Labour’s priority is to raise money or to help home buyers.

Non-dom status

Labour has been clear for a long time that it would launch a crackdown on tax avoidance and loopholes, including abolishing the non-dom status.

Many tax professionals agree that the concept of domicile is outdated for tax purposes. 

However, experts argue that Reeves will need to consider carefully how the new Labour government can ensure the UK remains an attractive hub for international businesses to operate from, and for wealthy foreigners to live.

Rachel de Souza at the accountancy firm RSM, comments: “The most concerning point is Labour’s proposals to end the inheritance tax exemption for trusts settled by non-doms with non-UK assets. 

“This one change will likely prove key in driving wealthy non-doms to leave the UK. The issue for UK plc is that many of those planning to go are exactly the people with the skills and abilities to grow businesses and the economy. In other words, exactly the sort of people that Rachel Reeves is keen to encourage.”

She adds: “Non-doms will listen into the first Labour fiscal event with interest, but at present many are busy scouting out where they will relocate to, taking their businesses and their significant spending power with them.”

British ISA

The British ISA was absent from the Labour manifesto - but could potentially still make an appearance in the Budget.

The proposal from the Conservative government was that savers would get an extra £5,000 tax-free allowance each year that they could invest in UK assets. 

If Labour is serious about boosting the UK economy, it may want to resurrect the idea. 

However, critics say the British ISA will make the ISA regime more complicated, and have little impact on the economy.

Capital gains tax and inheritance tax?

Labour repeatedly insisted they will “not increase taxes on working people”, and said that National Insurance, income tax, VAT and corporation tax would not be hiked.

The party has offered no such assurances about capital gains tax and inheritance tax though, raising questions over whether these could be tweaked in the Budget.

William Stevens, head of financial planning at Killik & Co, comments: “The key topics on most savers' and investors’ minds will be the uncertainty left by the gaps in manifestos – rather than what was included. 

“With a refusal to acknowledge [that capital gains tax] won’t change, it remains a very real possibility that we see an increase to help fund any fiscal shortfalls elsewhere.”

Inheritance tax (IHT) could also get a mention. 

For example, a government needing to raise revenue could increase the rate of inheritance tax, cut the tax-free allowance (known as the nil-rate band), scrap gifting allowances or change or axe IHT reliefs.

Ruth Emery
Contributing editor

Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.

She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.