Brits on red alert for more tax rises: Rachel Reeves ‘has already wiped out most of her headroom from Budget raid’
Brits are on red alert for further tax rises amid fears the bulk of Rachel Reeves’ monster budget raid has already been scrapped.
The Chancellor justified his latest attack on the nation’s wallets in November by arguing that he needed to create so-called ‘headroom’ in his plans.
This is the leeway to achieve its main financial target of revenues covering day-to-day expenses over a three-year period.
But Bloomberg analysis suggests two-thirds of the £22bn margin may have already been lost due to U-turns, lower GDP growth expectations and a defense funding gap.
Since the budget the government has moved to appease angry family farmers by relaxing inheritance tax rules, at an estimated cost of £130 million a year.
Chancellor Rachel Reeves justified her latest attack on the nation’s wallets in November by arguing that she needed to create so-called ‘headroom’ in her plans.
Ms Reeves is also promising to ease devastating business rate rises for pubs; insiders suggest it could have a price tag of £300 million.
Labor MPs are clamoring for benefits to be extended to the entire hospitality sector, something that could significantly increase costs.
Meanwhile, a sharp reduction in net migration could give the Treasury a major headache as higher figures would increase GDP even if wealth per capita did not increase.
If long-term inflows are 100,000 a year lower than the OBR watchdog expects, it could cut tax revenues by £9bn in 2029-30, according to Bloomberg.
Questions have also been raised over defense funding as the government’s investment plan appears to have been delayed as ministers decide how to plug the £28bn deficit over the next four years.
Ms Reeves moved to prevent the OBR from officially revealing whether it had complied with its fiscal rules in March; however, this will provide an assessment and update the predictions.
But renewed pressure on finances will raise alarm about tax increases again in the autumn.
Ms Reeves, who is known to have broken her 2024 promise that burdens will not increase beyond record levels, said after the last Budget: ‘I reserve the right to take action at any point.
“But I think the space we have and the changes we’ve made mean I won’t have to do that in the spring.”
‘Of course, I reserve the right to take action at any time.’
Official figures show Ms Reeves has the dubious distinction of delivering two of the 10 biggest tax-raising budgets in history.
The Chancellor’s November 2025 package is ranked seventh in the historical database compiled by the Treasury’s OBR watchdog.
Meanwhile, its first Budget in 2024 was rated as the second largest based on figures from nearly six decades ago.
