Rachel Reeves may be considering over a hundred tax and spending plans | Personal Finance | Finance

The Chancellor is claimed to be weighing up more than a hundred separate tax and spending measures as she tries to plug a £30 billion hole in the nation’s finances.

Options range from an “exit tax” on the wealthy to higher council tax bands and possible increases in income tax.

The Chancellor is understood to be considering a sweeping series of measures focused on the top third of earners after the Office for Budget Responsibility (OBR) handed her a bleak economic assessment, including a £20 billion downgrade to productivity forecasts.

However, the Chancellor has warned people against taking any major steps with their personal finances and pensions based on speculation and rumour.

And there remains “considerable uncertainty” over which of the potential tax rises Reeves will eventually choose.

The OBR’s projections, delivered on Friday, were said to be “much worse than expected” on productivity but more positive on GDP growth and debt interest payments, thanks to falling gilt yields.

Reeves is reported to be pressing the OBR to recognise potential growth-boosting reforms not yet included in its outlook.

The Times reported: “There are around a hundred tax and spending measures still under consideration for the budget.”

Defence Secretary John Healey warned on Sunday that there would be “consequences” from the worsening economic forecasts, declining to repeat Labour’s promise not to raise income tax, national insurance or VAT.

Speaking to Sky News’s Sunday Morning with Trevor Phillips, Mr Healey said: “No decisions have been taken about the budget, even the Office for Budget Responsibility hasn’t produced its final figures.

“But what we do know is that they now see the deep damage and scarring to be much more serious than previously thought, a combination of years of cuts, Covid and really slow economic growth over 14 years.

“So there are consequences. Things do change, and we’ll have the announcements that are needed to deal with those challenges in the budget.”

Treasury officials have reportedly been told to protect the incomes of those in the lower two-thirds of earners – roughly anyone earning under £45,000. Those above that threshold could face higher income tax rates or other levies.

The Sunday Times reported that Reeves and Sir Keir Starmer were prepared to break Labour’s manifesto pledge not to “increase taxes on working people”, noting that focusing on higher rates – 40p above £50,271 and 45p above £125,140 – would raise hundreds of millions, but not the billions needed.

According to Bloomberg, Reeves is also “considering bolder and more progressive tax changes” than many investors had anticipated, including a “settling-up charge” or exit charge on wealthy Brits who move abroad for tax reasons.

Under the mooted plan, those emigrating could face a 20% charge on the value of UK assets at the point of departure, raising about £2 billion for the Treasury. The Times said this would bring Britain into line with other major economies that already impose exit taxes.

However, tax expert Dan Neidle, of Tax Policy Associates, warned on X that such speculation might “encourage people to leave early to pre-empt it”.

Reeves is also said to be examining reforms to council tax to raise more from expensive homes, which critics have described as a “mansion tax by stealth”. Other options include higher capital gains tax on investments, extending National Insurance Contributions to landlords and limited liability partnerships, new online gambling levies, and restricting car use for some benefit claimants.

Despite ruling out a formal wealth tax, opinion polls show most Brits would support one. Economists say income tax remains the most efficient way to raise the sums Reeves needs, warning that numerous smaller tax rises could cause “unnecessary economic damage”.

The TaxPayers’ Alliance said households were already contributing record sums to the Exchequer. New analysis shows the average household will pay almost £600,000 in income tax over a lifetime, and £1,277,580 in total taxes including National Insurance and VAT.

John O’Connell, the group’s chief executive, said: “These figures are a damning indictment of consecutive governments failing to get spending under control while demanding taxpayers hand over more and more to fund an ever-expanding state.

“Most households are now tax-millionaires but rather than look at ways to reduce the tax burden, the Chancellor is widely expected to launch another devastating raid on household budgets.

“Rachel Reeves should be ruling out tax rises and focus her fiscal policy on significant spending cuts to reduce the pressures on hard-working taxpayers.”