The 8 Budget predictions that affect you and your money the most

Chancellor Rachel Reeves will deliver her Autumn Budget on Wednesday October 30 with pressure to improve economic outlook while dealing with increasing public debt.

The UK is the only G7 country with economic inactivity higher than it was before the Covid pandemic, Prime Minister Sir Keir Starmer said on Monday.

Tax rises are expected, after Ms Reeves said there was a “£22 billion black hole" in public finances.

Speaking on Monday, Sir Keir said: "I think for too long, we pretended that you could lower tax and spend more on your public services, but you can't. And it's about time we faced up to that."

He added: "Borrowing will drive long-term growth. Tax rises will prevent austerity and rebuild public services. We choose to protect working people. We choose to get the NHS back on its feet. We choose to fix the foundations, reject decline and rebuild our country with investment."

Although remaining tight lipped about the exact contents of the Budget, we have some things confirmed, and others that look likely to come to fruition.

'Working people' won't pay more tax - but what’s Labour's definition of a working person?

Labour said in its election manifesto it would not increase taxes on "working people", ruling out a rise in VAT, National Insurance and Income Tax.

However, it's unclear what Labour's definition of working people is, with it looking likely self-employed people won’t be spared grace.

Education Secretary Bridget Phillipson refused to say if small business owners were working people, only telling the BBC's Sunday with Laura Kuenssberg that Labour's manifesto pledge referred to people "whose main source of income is the income they earn from going out to work".

She said her £160,000 salary "derives from my job", but wouldn't confirm if a small business owner making a £13,000 profit counted as a working person.

People who make money from assets such as shares or properties are unlikely to be considered a working person after Sir Keir Starmer told Sky News: "Well, they wouldn't come within my definition."

This could open the door for hikes to Capital Gains Tax and Inheritance Tax (IHT).

National Insurance rise

The Chancellor is expected to raise the amount of National Insurance employers pay for their staff and lower the threshold of when they start paying.

Currently employers pay 13.8% of an employee's salary once they start earning more than £9,096 a year. (This threshold is higher for some groups such as people who work in freeports or apprentices under 25.)

A rise in employer NI contributions could reduce the number of jobs created, with Mel Stride, the shadow work and pensions secretary, branding it a "tax on jobs".

While Labour said it would not raise taxes for 'working people' it is not known whether the self-employed will be protected.

Currently self-employed workers pay National Insurance on any profits over £12,750. They pay 6% on profits between £12,750 and £50,270 and 2% on profits above that.

Tackling NHS backlog

Rachel Reeves has confirmed the NHS will receive a huge cash injection to bring down NHS waiting times.

There will be £1.5bn for new surgical hubs and scanners, and £70m for new radiotherapy machines.

The investment aims to deliver 40,000 extra elective appointments per week and an extra two million NHS operations, scans and appointments a year.

Records show more than 7.6 million were on the NHS waiting list in August. In the same month, over 280,000 had been waiting for an operation, scan or appointment for over a year.

Major reforms are also in the pipeline to make the NHS more efficient, including on the delivery of elective activity and patient pathways. Billions of pounds are set to be invested in technology and digital innovations across the NHS to boost productivity and make savings.

Capital Gains Tax reform

Capital Gains Tax is paid on profits made from assets sold. It applies to possessions worth more than £6,000, apart from your car. This includes second homes or shares. Depending on what is sold, basic rate taxpayers are charged either 10% or 18% and higher rate taxpayers are charged 20% or 24%.

According to The Times, the 24% for second homes is not likely to be increased (despite reducing from 28% since April 6 2024). However, the 20% tax on the selling of shares could be increased.

It is unclear whether basic rate taxpayers will be caught up in any Capital Gains Tax rises.

There is a tax-free allowance of £3,000 which could also be reduced, despite already being cut from £12,300 in 2022/23 and £6,000 in 2023/24.

Inheritance Tax

Inheritance Tax is paid on anything over £325,000 when a person dies - and has been frozen at this amount since 2009 despite the average property prices soaring to almost double in that time.

Anything over this threshold is taxed at 40% - one of the highest levels in the Organisation for Economic Co-operation and Development (OECD) group of 38 high-income nations.

There are fears IHT will be targeted after Darren Jones, then the shadow chief secretary to the Treasury, said before the election that IHT could "redistribute money". There are a few elements of IHT that could be targeted.

Currently there is spousal exemption which allows married couples and civil partners to transfer all their assets free from tax.

The £325,000 threshold extends to £500,000 if you leave your home to your children or grandchildren and your estate is less than £2million.

There is also a way to avoid paying IHT by handing over wealth before you die, as well as relief on business and agricultural property.

So these stipulations could be tinkered with to make more people pay more tax.

Minimum wage rise

Minimum wage could rise by three times the rate of inflation, according to reports.

A 6% increase in minimum wage would take the level for people aged over 21 to £12.12 an hour. There would be higher increases for younger people, according to media reports.

Inflation was at 1.7% in September.

The minimum wage rose by more than 9% per year in 2023 and 2024. The previous government had a target of raising rates to two-thirds of median earnings.

£2 bus fare cap to rise

During the cost of living crisis the Conservative government imposed a £2 cap on bus fares in England to ensure cheap travel was available.

However, this scheme is due to come to an end on December 31 2024.

The Labour Government has confirmed it will raise it to £3 until the end of 2025.

In a speech in Birmingham, Sir Keir Starmer said: "I do know how much this matters, particularly in rural communities where there's heavy reliance on buses."

At the time of writing more than 60,000 people had signed a petition to keep the cap at £2.

Campaigner Cat Hobbs tweeted it was "bleak, depressing, unnecessary" to raise bus fares to £3.

Getting people back into work

There will be £240 million to fund local services to get people back into work, Sir Keir has confirmed.

It will "tackle the root causes for economic inactivity", he added, so "those who can work do work".

Cost of public borrowing

The Government is trying to claw back funds as public borrowing is soaring.

The UK Government borrowed £16.6bn in September alone, a £2.1bn increase on September 2023. The total national debt is £2.8 trillion.

The cost of Government borrowing - where it sells bonds - increased for the UK last week after it was suggested Ms Reeves would change the definition of Government debt to give more financial headroom.

Sir Keir said: " "The time is long overdue for politicians in this country to level with you honestly about the trade-offs this country faces, to stop insulting your intelligence with the chicanery of easy answers.

"Working people know that hard choices are necessary. They lived through the Liz Truss episode. They lived through the cost-of-living crisis.

"So they know that the things they want from us - protecting their living standards, building our nation, fixing our public services - they know that this can only be achieved alongside economic stability.

"There are no short cuts."

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