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Yahoo
11 hours ago
- Business
- Yahoo
What benefit claimants need to know about Labour's welfare U-turn
Labour ministers have announced two major changes to their controversial welfare reforms amid intense criticism over the measures. Over 120 Labour MPs were threatening to rebel against the government over its 'Universal Credit and Personal Independence Payment Bill' which is still set to be voted on by members on Tuesday. Writing to Labour MPs on Thursday evening, work and pensions secretary Liz Kendall said: 'These important reforms are rooted in Labour values, and we want to get them right.' 'We have listened to colleagues who support the principle of reform but are worried about the impact of the pace of change on those already supported by the system.' The piece of legislation will still bring in the two key changes to Universal Credit and the Personal Independence Payment (PIP). However, tweaks have been made to ensure that existing claimants have greater protections than first promised. Here's everything you need to know: The central cost-cutting measure remains a tightening of the eligibility to be awarded PIP. Currently claimed by 3.7 million people, the benefit is designed to help with extra costs related to health or disability. Under the changes, around 1.5 million of the current claimants would not be found eligible for the 'daily living' side of the benefit. This is because, while they scored the eight points needed at assessment to be awarded at least the lowest payment rate, they did not score four in any single category. Initially, Labour had pledged to give transitional protection to any claimant who was reassessed and found ineligible for the benefit because of the changes. This meant they were guaranteed the same payment rate for 13 weeks. Ms Kendall has now confirmed that all existing claimants will not be subject to the new criteria. While they will still be subject to reassessment – happening every three years on average – they will not have the requirement to score four points in a single category. This means it is advisable for anyone who thinks they might be eligible for PIP to apply for it as soon as possible. And at least before November 2026 when the changes would come in to effect. This can be done on This means that around 370,000 claimants are expected to have an average £4,500 protected, research from the Resolution Foundation finds. The other key change in the bill sees the rates of Universal Credit changed, with the standard rate rising while the health-related rate is cut back. The plans would bring in an across-the-board increase to the standard Universal Credit allowance for new and existing claims from April 2026. This will be a boost of £7 a week, to £106. But at the same time, the payment rate for the health-related element of Universal Credit was due to be frozen at £105 a week until 2029/30. However, Ms Kendall has confirmed that the income of existing claimants will be protected in real-time, meaning it should at least rise with inflation. This will also apply to any new claimant meeting the severe conditions criteria. The Resolution Foundation estimates that this will 'insulate 2.25 million people from a loss of between £250 and £500 per year.' However, the government has not made any concession on its plan to cut the Universal Credit health element for new claimants to £54 a week – a rate of almost half. Charities and campaigners have criticised the government's concessions over the bill as threatening to create a 'two-tier' system. This is because those currently claiming PIP and Universal Credit health will benefit from more generous rules and rate than new applicants after the changes come into effect. Responding to the concessions, Charles Gillies, senior policy officer at the MS Society and policy co-chair of the Disability Benefits Consortium, said: 'These supposed 'concessions' to the cuts bill are just a desperate attempt to rush through a disastrous piece of legislation. 'By pushing the cuts onto future claimants, the government are betraying the next generation of disabled people. Why should someone who needs support to wash in 2025 be entitled to PIP, but not someone who has the same needs in 2035?'
North Wales Chronicle
12 hours ago
- Business
- North Wales Chronicle
Labour in ‘good place now' on welfare, Kendall insists after Government U-turn
Work and Pensions Secretary Liz Kendall sought to downplay party splits over the legislation after Downing Street offered concessions in a late-night climbdown to head off Prime Minister Sir Keir Starmer's first Commons defeat. Meanwhile, Number 10 said there will be no 'permanent' increase in borrowing as a result of the U-turn but declined to rule out tax rises in the autumn amid mounting questions about how the changes will be funded. Some 126 Labour MPs had signed an amendment that would halt the Universal Credit and Personal Independence Payment Bill in its tracks when it faces its first Commons hurdle on Tuesday. Leading rebels now believe the concessions on offer, which include protecting personal independence payments (Pip) for all existing claimants, will be enough to win over a majority. However, the fallout threatens to cause lasting damage as harder line rebels remain opposed to the legislation and some backbenchers have called for a reset of relations between Number 10 and the parliamentary party. Facing questions about the climbdown on Friday, Ms Kendall denied suggestions she had found it 'difficult' to water down reforms she had so strenuously defended and said the concessions left the Bill in 'the right place'. 'We have listened to people, we have engaged with them,' she said. 'I think we're in a good place now, alongside the huge investments we are putting in to create the jobs that people need in every part of the country… but also to make sure there's employment support for those who can work and protections for those who can't.' Asked how she felt about softening the impact of the policy, Ms Kendall said: 'I don't find it difficult, because the principles that I strongly believe in, that work for those who can is the best route out of poverty… that we must protect those who can never work, that is really, really important. 'Those principles are ones we all agree on. 'We're in the right place with the changes we've made.' The Government has also left the door open to further reform later down the line, with Ms Kendall saying there need to be 'changes in the future' to ensure 'people who can work do'. Ministers had hoped the Bill would save up to £5 billion a year, but the changes announced after crisis talks with rebels on Thursday mean Chancellor Rachel Reeves would need to find the money elsewhere to make up the shortfall. The Government's original package had restricted eligibility for Pip, the main disability payment in England, as well as cutting the health-related element of universal credit. Existing recipients were to be given a 13-week phase-out period of financial support in an earlier move that was seen as a bid to head off opposition. Now, the changes to Pip will be implemented in November 2026 and apply to new claimants only while all existing recipients of the health element of universal credit will have their incomes protected in real terms. The concessions on Pip alone protect some 370,000 people currently receiving the allowance who were set to lose out following reassessment. The changes represent a major climbdown for the Prime Minister, just days after he insisted to reporters he would 'press on' with the cuts, arguing there was a 'moral case' for them. Ms Kendall confirmed the U-turn in a letter to MPs late on Thursday night, along with plans for a review of the Pip assessment to be led by disabilities minister Sir Stephen Timms and 'co-produced' with disabled people. A Number 10 spokesperson said: 'We have listened to MPs who support the principle of reform but are worried about the pace of change for those already supported by the system. 'This package will preserve the social security system for those who need it by putting it on a sustainable footing, provide dignity for those unable to work, support those who can and reduce anxiety for those currently in the system.' Dame Meg Hillier, one of the leading rebel voices, hailed the concessions as 'a good deal' involving 'massive changes' to protect vulnerable people and involve disabled people in the design of future reforms. She said: 'It's encouraging that we have reached what I believe is a workable compromise that will protect disabled people and support people back into work while ensuring the welfare system can be meaningfully reformed.' Not all the rebels have been satisfied with the changes, with several suggesting they would create a 'two-tier system' and raising questions about who would be classified as a new claimant after November 2026. One told the PA news agency that discontent and low morale among the backbenches would 'continue to fester' without a 'wider reset' of relations between Number 10 and the Parliamentary Labour Party. Another accused decision-makers in Government of operating as an 'exclusive club' and showing 'disregard' for both its MPs and experts outside Westminster. The concessions could also leave Ms Reeves scrambling to fill a hole in her budget come the autumn, with economists suggesting they could reduce the projected savings by at least £1.5 billion per year. The Institute for Fiscal Studies said the changes make further tax rises in the budget 'even more likely' in order for the Chancellor to balance the books. Meanwhile Ruth Curtice, chief executive of the Resolution Foundation think tank, suggested the changes could cost as much as £3 billion. Facing questions from reporters about how the reduction in cuts would be funded, Downing Street said there would be 'no permanent increase in borrowing' and promised further detail on the policy next week. 'We'll set out how this will be funded at the budget, alongside a full economic and fiscal forecast in the autumn, in the usual way,' a Number 10 spokesman said. 'The full details (of the changes) will be set out to Parliament ahead of the second reading on Tuesday.' Asked whether the Government could say there would be no tax rises to pay for the changes, the spokesman said: 'As ever, as is a long-standing principle, tax decisions are set out at fiscal events.' Number 10 dismissed suggestions that Sir Keir's leadership had been marked by a pattern of caving in 'if enough people kick up a fuss' following similar policy changes over the winter fuel payment and grooming gangs. Sir Keir earlier this month announced the fuel allowance would be reinstated for millions of pensioners and also agreed to a national inquiry into grooming gangs after an independent audit recommended a probe, following months of opposition pressure. 'It's not unusual as part of the parliamentary process to introduce a Bill, have a debate about the principles and then look at how those are implemented,' the spokesman said. 'Sometimes that's with amendments along the way.' On Friday morning, care minister Stephen Kinnock refused to be drawn on how the changes would be covered, saying it was 'very much the Chancellor's job as we move into the budget in the autumn'. He also declined to comment on whether it was fair that two people with the same condition would receive different amounts of money depending on when they started their claim. Mr Kinnock told Times Radio there were 'many different individual circumstances' and it was 'not possible to generalise'. Asked whether the Government now expected the Bill to pass, he said: 'Yes.' There was mixed reaction among charities to the prospect of concessions. Learning disability charity Mencap said the news would be a 'huge relief to thousands of people living in fear of what the future holds'. Director of strategy Jackie O'Sullivan said: 'It is the right thing to do and sends a clear message – cutting disability benefits is not a fair way to mend the black hole in the public purse.' The MS Society urged rebels to hold firm and block the Bill, insisting any Government offer to water down the reforms would amount to 'kicking the can down the road and delaying an inevitable disaster'. Charlotte Gill, head of campaigns at the charity, said: 'We urge MPs not to be swayed by these last-ditch attempts to force through a harmful Bill with supposed concessions. 'The only way to avoid a catastrophe today and in the future is to stop the cuts altogether by halting the Bill in its tracks.' The Tories described concessions as 'the latest in a growing list of screeching U-turns' from the Government. Shadow chancellor Mel Stride said: 'Under pressure from his own MPs, Starmer has made another completely unfunded spending commitment. 'Labour's welfare chaos will cost hardworking taxpayers. We can't afford Labour.'
The Guardian
13 hours ago
- Politics
- The Guardian
‘A negotiated dog's dinner': Starmer faces second revolt over welfare bill concessions
Keir Starmer is battling to stem the revolt over his cuts to disability benefits, with about 50 Labour MPs concerned the concessions will create a 'two-tier' system where existing and newly disabled people are treated differently. Senior government sources insisted things were 'moving in the right direction' for No 10, with the whips calling round backbenchers to persuade them to get behind the bill on Tuesday. Government insiders believe they have peeled off enough of the 120-plus opponents of the legislation to win the vote, after the work and pensions secretary, Liz Kendall, promised to exempt current disability claimants from the changes, and increase the health element of universal credit in line with inflation. However, rebel MPs will attempt to lay a new amendment on Monday giving colleagues a chance to delay the bill, which will still involve £2.5bn of cuts to future disability benefits. The continuing row over the reforms will likely blight the week that will mark the first anniversary of Labour's return to power. In an interview yesterday, Starmer admitted to a range of mistakes – including using the phrase 'an island of strangers' in an immigration speech, and of hiring his former chief of staff Sue Gray. His government has made a series of U-turns in the last 12 months – but his handling of the welfare bill might be the most damaging episode of them all. Starmer will next week be hoping to draw a line under the difficult period, which has also seen the government reverse cuts to winter fuel payments and change course over holding an inquiry into grooming gangs. Dozens of Labour MPs are continuing to speak out against the welfare cuts on a Labour WhatsApp group, with many MPs still undecided about how they will vote and pressing for more assurances that it is ethical and legal to set up a division between current and future claimants. Disability charities are warning that the bill is still 'fatally flawed' and will lead to an 'unequal future' for different groups of disabled people, making life harder for hundreds of thousands of future claimants. Starmer defended the bill on Friday, saying it strikes the right balance. The changes will protect 370,000 existing recipients who were expected to lose out after reassessment. 'We talked to colleagues, who've made powerful representations, as a result of which we've got a package which I think will work, we can get it right,' the prime minister said. Asked how the government would pay for the £3bn of concessions, which experts believe will have to be funded by tax rises or extra borrowing, Starmer replied: 'The funding will be set out in the budget in the usual way, as you'd expect later in the year.' There would need to be at least 80 rebels to defeat the bill, and government sources are quietly confident they have given enough ground after Meg Hillier, the chair of the Treasury committee, said she would back the legislation following changes. However, others are unconvinced. One leading rebel said 'everyone but a handful of people is unhappy', even if they do end up reluctantly backing the changed legislation, while another expressed frustration that No 10 and the whips were 'trying to bounce people into agreeing before we've seen enough details'. Rachael Maskell, the Labour MP for York Central, who is one of the leading opponents of the bill, said: 'They are going to have to go back to the negotiating table … deaf and disabled people's organisations [DDPOs] are rejecting these changes as it fails to address future need and gives no security for people with fluctuating conditions, for instance where people are in remission.' Other critics who plan to vote against the bill include the MP for Crawley, Peter Lamb, who said: 'Despite many improvements to the system set out in the bill, at its core the bill remains a cost-cutting exercise. No matter the level of involvement of disability groups in co-producing a scheme for new applicants, to save money the new scheme has to result in people with high levels of need losing the support necessary to wash themselves, dress themselves, and feed themselves.' Sign up to Headlines UK Get the day's headlines and highlights emailed direct to you every morning after newsletter promotion Simon Opher, the MP for Stroud, also said he still opposed the bill: 'The changes do not tackle the eligibility issues that are at the heart of many of the problems with Pip [personal insurance payments]. The bill should be scrapped and we should start again and put the needs of disabled people at the centre of the process.' Diane Abbott, a leading figure from the left of Labour, said the rebellion was 'far from over', while another Labour MP said: 'The bill starts from the premise of cuts, not reform. It's also arse about face in terms of impact assessments and co-production. It's simply a negotiated dog's dinner. In that sense, nothing has really changed except the fact they've negotiated more misguidedly to sign up to it.' One thing Labour MPs are pushing hard for is more clarity on the review of how the Pip system works, due to be done by the autumn by Stephen Timms, a work and pensions minister. Many expect that process to change the points system from what has been proposed so far. Some in the party also want Starmer to reinstate Vicky Foxcroft, who quit as a whip to vote against the bill before the U-turn was made. Stella Creasy, a leading Labour MP who had initially signed the amendment to delay the bill, said she wanted to see more details. 'The concern is to get to be workable … We need to understand why we would treat one group of claimants differently from another,' she added. Another Labour MP, from the 2024 intake, said: 'I'm waiting to look at the details before making any decisions. Many are in the same place as me and need to get something more than a midnight email on an issue of this much importance to hundreds of thousands of people'. The Labour MPs opposed the changes are citing a fundamental rejection of the idea that a Labour government will be making disabled people worse off. But at the same time, many of them have also been alienated by what they say is a No 10 operation that is out of touch with how the parliamentary party is feeling, and has tried to strongarm MPs into backing the legislation by threats and promises of preferment. 'Goodwill has been lost and there is still huge suspicion about whether they will try and pull a stunt at the last minute,' said one Labour MP. The majority of disability charities and campaign groups were on Friday still opposed to the cuts. The disability equality charity Scope said that despite concessions, an estimated 430,000 future disabled claimants would be affected by 2029/30. Its strategy director, James Taylor, said: 'It is encouraging that the government is starting to listen to disabled people and MPs who have been campaigning for change for months. But these plans will still rip billions from the welfare system. 'The proposed concessions will create a two-tier benefits system and an unequal future for disabled people. Life costs more if you are disabled. And these cuts will have a devastating effect on disabled people's health, ability to live independently or work.' A coalition, including Disabled People Against Cuts, said: 'Disabled people and disability rights groups totally reject the performative politics being enacted by the government, in response to being challenged by a growing MP rebellion and a tidal wave of anger from the public. 'We will not sell out generations of disabled people past and future by accepting this sham of alleged concessions on welfare spending so that they can save face. The reforms are ill thought out, and MPs still do not have a full understanding of their implications and impact.'
Daily Mail
14 hours ago
- Business
- Daily Mail
Tax hikes Reeves could impose after the £3bn benefits U-turn
Households are on alert for further potential tax hikes in autumn after Keir Starmer handed major concessions to rebels in a bid to salvage flagship legislation on health and disability benefits. On Friday, the government confirmed a U-turn on its cuts to disability benefits in order to avert a rebellion by more than 120 Labour backbenchers. The reversal leaves a £3billion hole in Chancellor Rachel Reeves ' financial plans, according to the Institute for Fiscal Studies. Meanwhile, the Resolution Foundation warned that tax rises may be needed for her to now meet her fiscal rules. The initial benefit reforms would have saved the government £5.5billion by the end of the Parliament. The planned cut to personal independence payments eligibility was set to raise the bulk of this saving, £4.5billion. However, according to the IFS, the revised package of reforms will save only £2.5billion, so will cost the government £3billion relative to their previous plans. Under the change in tack, people who currently receive personal independence payments (PIP), or the health element of universal credit, will continue to do so. Instead, planned cuts will now only hit future claimants. Liz Kendall, Secretary of State for Work and Pensions, said: 'We have listened to people, we are in a good place now'. Most economists and think tanks think tax rises in the Autumn Budget 2025 are now inevitable. Tom Waters, an associate director at IFS, said: 'These changes more than halve the saving of the package of reforms as a whole, making the Chancellor's already difficult Budget balancing act that much harder. 'The decision is to protect existing health-related benefit claimants from the reforms, thereby making the savings entirely from new claimants to these benefits. 'This will create big differences – thousands of pounds a year, for many years in some cases – between similar people with similar health conditions who happen to have applied at a slightly different time.' Samuel Mather-Holgate, an independent financial adviser at Mather and Murray Financial told Newspage: 'With Starmer doing more U-turns than someone doing the bleep test, taxes are going up. 'There's no way that other departments can mitigate these changes to their budget.' Which taxes could be increased? Reeves has ruled out taxes on the working people, including income tax , National Insurance for employees, VAT and corporation tax. Other taxes will be in her sights. Capital gains tax Higher capital gains tax could be one option for Reeves. Capital gains tax is levied on profits from assets ranging from shares to second homes, buy-to-let properties and personal possessions. The rates for stocks and shares gains were hiked in the 2024 Autumn Budget to 18 per cent for basic rate taxpayers and to 24 per cent for those paying higher rates of tax. The profits from assets like sharers tend to come from people taking a risk, whether an entrepreneurial one or an investment one, making capital gains tax a likely target for hikes. Inheritance tax Reeves could have inheritance tax in her sights again It is a growing money-spinner for the government, with the number of households falling in scope for it rising. In the 2024 Autumn Budget, Reeves capped the availability of Business Relief and Agricultural Relief, and halved the relief available on Alternative Investment Market shares. Reeves also unveiled plans to bring pensions into the scope of inheritance tax from 2027. Further tweaks and amendments could happen. Pensions Pensions are a major source of wealth for many people, making them a prime target for Reeves. Last year, while Reeves dragged unused pension assets into the inheritance tax net from April 2027, she did not go as far as some experts feared. That is not to say that she will not meddle with pensions later this year. HMRC recently announced a consultation on salary sacrifice - when people forgo a pay rise or bonus and add to their pension instead, which helps avoid higher marginal tax rates. It has prompted speculation that Reeves could introduce a cap on the amount of salary sacrifice people can use. There is also speculation about the reintroduction of the pensions lifetime allowance. The Chancellor could also look at reforming income tax relief on pension contributions. Tax thresholds freeze The freeze on certain tax thresholds since 2021 has created a huge stealth tax raid in recent years. The frozen basic rate threshold, currently £12,570, drags more people into paying income tax and means that the real value - adjusted for inflation - of the tax-free allowance has been diminished. Stalling the higher rate threshold at £50,270 has shifted more people and a greater slice of earnings into the 40 per cent bracket. John Woolfitt, a director at Atlantic Capital Markets, told Newspage: 'A "stealth tax" manoeuvre will be high on the cards. 'Income tax allowance and the higher-rate threshold currently rise with inflation . Freezing or delaying future increases effectively raises income tax, without officially having to announce a hike.' He added: 'Targeting high earners and wealth transfers could also be seen and a populist move as the government tries to sure up support from the broader electorate.' According to the Resolution Foundation, extending the freeze in personal tax threshold by one year will save £4billion a year, 'though further consolidation is likely to be needed in the Budget this Autumn.' Property Businesses Higher employer national insurance contributions are already hammering businesses across Britain. However, under growing pressure to boost the Treasury's coffers, Reeves could set her signs on corporation taxes, VAT exemptions or other duties. 'This would really impact the already fragile business confidence in the UK', Woolfitt said. Wealth tax Some campaigners believe Reeves should impose a wealth tax to boost the tax-take and quash inequality. Tax Justice UK is calling on more taxes for the super-rich to be introduced by the current Government. It wants to see a 2 per cent wealth tax on assets over £10million, which it says will raise up to £24 billion a year. It also wants to apply national insurance to investment income, close inheritance tax and non-dom loopholes, and introduce a 4 per cent tax on share buybacks. It remains unclear whether a wealth tax is on Reeves' agenda and how it would work in practice. An unprecedented 16,500 wealthy Britons are predicted to leave this year amid higher taxes and a gloomy economic outlook.
Daily Mail
15 hours ago
- Business
- Daily Mail
The tax hikes Rachel Reeves could impose to plug the benefits U-turn £3bn hole
Households are on alert for further potential tax hikes in autumn after Keir Starmer handed major concessions to rebels in a bid to salvage flagship legislation on health and disability benefits. On Friday, the government confirmed a U-turn on its cuts to disability benefits in order to avert a rebellion by more than 120 Labour backbenchers. The reversal leaves a £3billion hole in Chancellor Rachel Reeves' financial plans, according to the Institute for Fiscal Studies. Meanwhile, the Resolution Foundation warned that tax rises may be needed for her to now meet her fiscal rules. The initial benefit reforms would have saved the government £5.5billion by the end of the Parliament. The planned cut to personal independence payments eligibility was set to raise the bulk of this saving, £4.5billion. However, according to the IFS, the revised package of reforms will save only £2.5billion, so will cost the government £3billion relative to their previous plans. Under the change in tack, people who currently receive personal independence payments (PIP), or the health element of universal credit, will continue to do so. Instead, planned cuts will now only hit future claimants. Liz Kendall, Secretary of State for Work and Pensions, said: 'We have listened to people, we are in a good place now'. Most economists and think tanks think tax rises in the Autumn Budget 2025 are now inevitable. Tom Waters, an associate director at IFS, said: 'These changes more than halve the saving of the package of reforms as a whole, making the Chancellor's already difficult Budget balancing act that much harder. 'The decision is to protect existing health-related benefit claimants from the reforms, thereby making the savings entirely from new claimants to these benefits. 'This will create big differences – thousands of pounds a year, for many years in some cases – between similar people with similar health conditions who happen to have applied at a slightly different time.' Samuel Mather-Holgate, an independent financial adviser at Mather and Murray Financial told Newspage: 'With Starmer doing more U-turns than someone doing the bleep test, taxes are going up. 'There's no way that other departments can mitigate these changes to their budget.' Which taxes could be increased? Reeves has ruled out taxes on the working people, including income tax, National Insurance for employees, VAT and corporation tax. Other taxes will be in her sights. Capital gains tax Higher capital gains tax could be one option for Reeves. Capital gains tax is levied on profits from assets ranging from shares to second homes, buy-to-let properties and personal possessions. The rates for stocks and shares gains were hiked in the 2024 Autumn Budget to 18 per cent for basic rate taxpayers and to 24 per cent for those paying higher rates of tax. The profits from assets like sharers tend to come from people taking a risk, whether an entrepreneurial one or an investment one, making capital gains tax a likely target for hikes. Inheritance tax Reeves could have inheritance tax in her sights again It is a growing money-spinner for the government, with the number of households falling in scope for it rising. In the 2024 Autumn Budget, Reeves capped the availability of Business Relief and Agricultural Relief, and halved the relief available on Alternative Investment Market shares. Reeves also unveiled plans to bring pensions into the scope of inheritance tax from 2027. Further tweaks and amendments could happen. Pensions Pensions are a major source of wealth for many people, making them a prime target for Reeves. Last year, while Reeves dragged unused pension assets into the inheritance tax net from April 2027, she did not go as far as some experts feared. That is not to say that she will not meddle with pensions later this year. HMRC recently announced a consultation on salary sacrifice - when people forgo a pay rise or bonus and add to their pension instead, which helps avoid higher marginal tax rates. It has prompted speculation that Reeves could introduce a cap on the amount of salary sacrifice people can use. There is also speculation about the reintroduction of the pensions lifetime allowance. The Chancellor could also look at reforming income tax relief on pension contributions. Tax thresholds freeze The freeze on certain tax thresholds since 2021 has created a huge stealth tax raid in recent years. The frozen basic rate threshold, currently £12,570, drags more people into paying income tax and means that the real value - adjusted for inflation - of the tax-free allowance has been diminished. Stalling the higher rate threshold at £50,270 has shifted more people and a greater slice of earnings into the 40 per cent bracket. John Woolfitt, a director at Atlantic Capital Markets, told Newspage: 'A "stealth tax" manoeuvre will be high on the cards. 'Income tax allowance and the higher-rate threshold currently rise with inflation. Freezing or delaying future increases effectively raises income tax, without officially having to announce a hike.' He added: 'Targeting high earners and wealth transfers could also be seen and a populist move as the government tries to sure up support from the broader electorate.' According to the Resolution Foundation, extending the freeze in personal tax threshold by one year will save £4billion a year, 'though further consolidation is likely to be needed in the Budget this Autumn.' Property Further tax changes linked to buying and selling property could be introduced. Last year, Reeves introduced a 2 per cent increase to stamp duty for second home owners. Future stamp duty hikes could target owners of multiple properties or high-value property transactions. Businesses Higher employer national insurance contributions are already hammering businesses across Britain. However, under growing pressure to boost the Treasury's coffers, Reeves could set her signs on corporation taxes, VAT exemptions or other duties. 'This would really impact the already fragile business confidence in the UK', Woolfitt said. Wealth tax Some campaigners believe Reeves should impose a wealth tax to boost the tax-take and quash inequality. Tax Justice UK is calling on more taxes for the super-rich to be introduced by the current Government. It wants to see a 2 per cent wealth tax on assets over £10million, which it says will raise up to £24 billion a year. It also wants to apply national insurance to investment income, close inheritance tax and non-dom loopholes, and introduce a 4 per cent tax on share buybacks. It remains unclear whether a wealth tax is on Reeves' agenda and how it would work in practice. An unprecedented 16,500 wealthy Britons are predicted to leave this year amid higher taxes and a gloomy economic outlook.
