Reeves plots tax raid on Middle England: Fears grow that Chancellor will target savings, pensions and property as she suggests Brits with the ‘broadest shoulders’ will pay billions more

Rachel Reeves has raised fears of a painful tax raid on Middle England, claiming those with the ‘broadest shoulders’ will have to pay billions of dollars more.

While official figures show the economy remained stable over the summer, the Chancellor has laid the foundations for a Budget that will target the better-off.

His comments at the International Monetary Fund’s annual meetings in Washington led to a warning that property, pensions and savings could be targeted.

Although the chancellor has ruled out a specific wealth tax, his words appear to signal that he wants to capture assets by other means. This will intensify speculation that inheritance tax, pension schemes or homeowners could be hit.

Ms Reeves said: ‘I think those with the broadest shoulders should pay a fair share of tax, and I think you can see that in my actions in the Budget last year.’

It was a clear signal that, after last year’s £40bn tax rise budget, the Chancellor was soon preparing to break his promise that he would ‘not come back with more’.

And Ms Reeves said her decision on who to target would be based on their assets (which could mean a home or savings) rather than wages.

When asked how he defines a rich person, he said: ‘Wealth is clearly different from income. So wealth isn’t about your annual salary.’ He made a distinction between certain wealth taxes that are being ignored and certain wealth taxes that ‘tax wealth and tax rich people’, some of which are being increased by Labor in 2024.

These included the imposition of VAT on private school fees, the abolition of non-dom status and the extension of taxes on private jets.

Asked where he might raise taxes, the Chancellor said: ‘Judge me on my record last year.’

To meet Budget rules, Ms Reeves will need to raise taxes and cut spending enough to fill a fiscal black hole worth tens of billions of pounds.

And he stated that he wanted to leave himself a greater margin of error against these goals, which required more pain. ‘More space requires more tax revenue or less spending on public services such as the NHS,’ Ms Reeves said. ‘So at this point you need to strike the balance.’

The Institute for Fiscal Studies has suggested £42bn may need to be raised to provide enough headroom to save the Chancellor from a repeat ‘Groundhog Day’ scenario.

Shadow chancellor Sir Mel Stride said: ‘Nothing is safe under Labor. Not your home, not your retirement, not your savings.

‘Rachel Reeves must show real backbone and control Government spending, including cutting the welfare bill, rather than shocking taxpayers again.’

This comes as a new survey showed firms are preparing to cut jobs, raise prices and cut investment if tax increases are in the budget. The survey by the Institute of Chartered Accountants in England and Wales found that many people had already taken similar actions following last year’s tax raid.

Alan Vallance, the institute’s chief executive, said: ‘The UK faces a damaging cliff edge if the Chancellor decides to raid businesses again in next month’s budget.

‘Business confidence is fragile, investment is stalled and day-to-day decisions are slowed by complexity, cost and uncertainty.’

The economy grew weakly by 0.1 percent in August and shrank by 0.1 percent in June; This means the UK is effectively on pause throughout the summer. Experts fear that speculation before the Budget will also negatively affect growth.

Meanwhile, the boss of Premier Inn owner Whitbread yesterday warned the Chancellor against further ‘punitive’ tax increases on businesses.

Dominic Paul says Labour’s workers’ rights bill makes growth difficult.

The Conservatives warned it comes at a time when ministers have “lost their way” and are planning a taxi tax grab.

Labor’s refusal to rule out the possibility of VAT being imposed on private hire rates has sparked speculation that the Chancellor will rip off taxi drivers in the Budget.

The Conservative Party has warned that such a move would hit rural people and disabled people hardest, and would also hurt the night-time economy.

Shadow transport secretary Richard Holden asked the Treasury what its assessment was of imposing 20 per cent VAT on private hire car journeys for vulnerable users.

Industry experts expect such a tax to raise £750 million a year; this adds £2 to £3 to the cost of a typical £12 journey.

Shadow transport secretary Richard Holden asked the Treasury what its assessment was of imposing 20 per cent VAT on private hire car journeys for vulnerable users.

Treasury Secretary Dan Tomlinson responded: ‘The Government continues to take this complex issue very seriously and recognizes the need for certainty for businesses. ‘The Government is carefully considering the wide range of views shared at last year’s consultations on the application of VAT on private hire vehicles and will publish a detailed response soon.’

Mr Holden said the Government refused to rule it out “because they had planned it”.

Currently most taxi operators do not need to charge VAT as their drivers are self-employed and earn less than £90,000.

Labour’s latest tax attack may still be more than five weeks away. But Rachel Reeves has given some insight into who she will target in next month’s Budget – and it’s not looking good for many parts of Middle England.

Don’t be fooled by the Chancellor’s dismissal of the ‘wealth tax’ yesterday; although it dashed hopes that left-wing Labor supporters would launch an all-out attack on the rich.

This could come in the form of a one-off tax or perhaps a 2 per cent annual levy on assets over £10 million. But with entrepreneurs and wealth creators already fleeing the country, any thoughts of such a move appear to have been abandoned.

Instead, Ms Reeves said on November 26 that taxes on the wealthy would still be ‘part of the story’ of the Budget, but ominously added that ‘wealth is different to income’ and ‘not about your annual salary’ and said: ‘Those with the broadest shoulders should pay their fair share of taxes.’

These comments, made at the International Monetary Fund’s annual meetings in Washington DC, suggest the Chancellor will stick to his manifesto commitment not to increase headline income tax rates, even if he may be tempted to extend the freeze on thresholds with a secret raid on millions of workers.

Labor also ruled out increases in VAT and National Insurance; But the Chancellor broke that promise with a £25 billion attack on business in his first budget.

So what does the Chancellor have in mind if there will be no ‘wealth tax’ on the ultra-rich and no direct increase in income taxes? So who will pay? Far from being a budget that will ‘wet the rich’ (although of course the rich will be affected), this budget appears to be a budget that will dilute the middle classes.

Everything from pensions to savings, from inheritances to family homes, has now become a target for the greedy Chancellor, determined to expand the State at the expense of everything else.

Rachel Reeves at the International Monetary Fund headquarters in Washington

An increase in capital gains tax seems likely; Such as National Insurance’s rental income and receipts from partners in law firms and consultancy firms.

Another inheritance tax raid could also be on the cards, following the blow to farms, family businesses and pensions in last year’s Budget.

Cash Isa is under siege and Ms Reeves may be tempted to increase taxes on dividends.

A change in property taxes, perhaps in the form of higher council tax bands, would hit millions; This includes those who bought their homes cheaply decades ago and saw their value skyrocket. Many will retire on low incomes, unable to afford the planned tax.

Talk of a mansion tax has already turned from a raid on homes worth over £2 million to homes worth £500,000. There are no mansions in most of the country.

Much will depend on who Labor decides has the ‘broadest shoulders’. Presumably this does not include the ‘working people’ that Labor has promised to protect.

Hapless ministers were left in knots when asked to describe such a person during the last Budget; This may be about to happen again when asked who these broad-shouldered taxpayers are this time.

Keir Starmer eventually described the employee as someone who ‘can’t write a check to get out of difficulties’; but Downing Street later announced they could have ‘a small amount of savings’.

If anyone with more than this is seen as rich, millions of families will be in the Chancellor’s crosshairs; Most of these are just to have a job, save for a rainy day, or for retirement and own a home.