Budget 2024 latest: Local mayors fear bus, train, and tram funding cuts as Reeves ‘plots Amazon tax’

Chancellor responds to fresh prediction for the economy ahead of 30 October statement

Keir Starmer refuses to rule out raising national insurance contributions

Rachel Reeves will announce Labour’s first Budget since coming into power on 30 October, leading one of the most anticipated fiscal events in over two decades.

Ahead of her announcement, local mayors have reportedly launched last-minute lobbying talks with the Treasury to prevent cuts to their transport budgets. The chancellor is reportedly looking to skim funds from the pots to help fill the £22bn public spending shortfall she revealed in July.

The reports come after cabinet ministers are understood to have written to the prime minister, going over Ms Reeves’ head to urge him to reconsider cuts to their departments.

It is thought that complaints came from the transport secretary, Louise Haigh, deputy PM and housing secretary, Angela Rayner, and justice secretary Shabana Mahmood.

Ms Reeves is also reportedly exploring increasing business rates on online tech giants in what has been dubbed an ‘Amazon tax’. The measure would be designed to help ailing high-street stores as online companies continue to dominate the market.

We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.

Key Points

• Streeting refuses to rule out income tax threshold freeze
• When is the 2024 Budget and what might be in it?
• Government will keep manifesto pledges, says Starmer

[24 October 2024 07:00 · Albert Toth]

ICYMI: Reeves considers ‘Amazon tax’ in business rates reform drive

The chancellor is reportedly considering a new ‘Amazon tax’ that would see business rates paid my online tech giants increased.

Industry sources understand that a consultation will be launched after Ms Reeves announces the Budget on 30 October. This means the plans may get a mention.

It comes after Labour wrote in its manifesto that it would reform the business rates system to “level the playing field between the high street and online giants.”

The manifesto added that the current system “disincentivises investment, creates uncertainty and places an undue burden on our high streets.”

[24 October 2024 04:00 · Albert Toth]

Budget rumours: Inheritance Tax reform

Inheritance tax is a levy on the estate of someone who has died. This is their property, money and possessions. Crucially, it is not paid if the value of these things is below £325,000.

The tax rate is 40 per cent, but it’s only charged on the part of the estate that’s above the threshold. In 2023/24, only 5 per cent of deaths generated an inheritance tax bill, raising around £7 billion.

However, the IFS writes that the tax measure “is littered with special exemptions”. These include a business relief, the ability to pass on agricultural land tax-free, and the tax-free passing on of pension pots.

The economic think tank says that ending these measures alone would raise £4.8bn a year by 2029.

[24 October 2024 01:00 · Albert Toth]

ICYMI: Rachel Reeves boosted by big drop in inflation as she seeks £40bn in Budget tax rises

Rachel Reeves has been boosted by a sharp drop in inflation as she seeks to find £40bn of tax hikes and spending cuts in this month’s Budget.

The chancellor will welcome the dip, which saw inflation fall under the Bank of England’s 2 per cent target for the first time in more than three years, as she prepares for what promises to be a brutal Budget.

[23 October 2024 22:00 · Albert Toth]

Budget rumours: Taxing pension savings

Pension tax relief is a reduction of the amount of tax paid on private pensions. It helps workers save for retirement by boosting their pension pots.

The amount of tax relief a person is granted is based on their income tax. It will effectively cancel out tax on pension contributions up to a maximum of £60,000.

After this, contributions will be taxed at either 20, 40, or 45 per cent, depending on which income tax rate the worker falls into.

However, the chancellor is thought to be considering a flat 30 per cent pension tax relief rate. This would mean that higher earners would effectively pay 10 per cent in tax, while those on the additional rate would pay 15.

The measure would raise around £3 billion a year, with 7 million earners paying more tax. But it would be better news for basic rate earners, who would actually begin to receive a 10 per cent boost to their pension contributions.

Evaluating the idea last year, the IFS said it would “redistribute the burden of taxation from the bottom 80 per cent to the top 20 per cent of earners.”

[23 October 2024 19:00 · Albert Toth]

ICYMI: Millionaires urge Reeves to raise £14bn from capital gains tax changes at Budget

Rachel Reeves should increase capital gains tax (CGT) at Labour’s upcoming Budget, a group of millionaire business owners have urged, estimating the measure would raise £14bn a year.

In a report by the IPPR think-tank, analysts have consulted with wealthy entrepreneurs who say higher CGT would not have stopped them from making investments in the UK.

[23 October 2024 16:00 · Albert Toth]

Budget rumours: Capital Gains reform

Capital Gains Tax (CGT) is paid on the profit made when an asset which has increased in value is sold. It is applied to things like the sale of personal possessions worth more than £6,000 (apart from a car), property that’s not the seller’s main home, shares and business assets.

It is charged at 10 or 18 percent for basic rate taxpayers, and 20 or 24 for higher or additional rate earners. There is a tax-free allowance of £3,000.

There are several ways CGT could be changed. In the run-up to the election, the Lib Dems and Greens both said they would rethink the tax bands to be more similar to income tax, raising an estimated £5.2bn a year.

[23 October 2024 14:44 · David Maddox]

ICYMI: Wes Streeting warned inflation-busting NHS Budget deal will not be enough

Fears have been raised that Wes Streeting’s inflation-busting funding deal for the NHS will not be enough for him to pay for the reforms he wants to drive through.

Sources have told The Independent that the Department for Health and Social Care is set to get about 4 per cent – between £7bn and £8bn – as Mr Streeting confirmed that he has mostly agreed his settlement with chancellor Rachel Reeves. Inflation is currently running at 1.7 per cent.

[23 October 2024 13:45 · Albert Toth]

Could the chancellor introduce an ‘Amazon tax’?

The chancellor is reportedly considering a new ‘Amazon tax’ that would see business rates paid my online tech giants increased.

Industry sources understand that a consultation will be launched after Ms Reeves announces the Budget on 30 October. This means the plans may get a mention.

It comes after Labour wrote in its manifesto that it would reform the business rates system to “level the playing field between the high street and online giants.”

The manifesto added that the current system “disincentivises investment, creates uncertainty and places an undue burden on our high streets.”

[23 October 2024 11:49 · Albert Toth]

Mayors in talks to soften local transport cuts – reports

Local mayors have reportedly engaged in a last-minute lobbying campaign to persuade the chancellor to soften potentially hundreds of millions in transport cuts.

There are fears bus, tube and tram projects in all 12 combined authorities represented by metro mayors could be at risk of underfunding. Following the local elections in May, 11 of these posts are held by Labour mayors.

“The mayors have been pushing back on the idea that their sustainable budgets should be cut, not least because many of them thought the money was guaranteed until 2027,” one official told The Guardian.

With the Budget only a week away, Ms Reeves will have already submitted her proposals to the Office for Budget Responsibility, making any last-minute changes unlikely.

The chancellor already made a substantial cut to rail infrastructure projects in July, when she announced the cancellation of the Tory-era Restoring Your Railways project alongside unveiling the £22bn shortfall in public spending:

[23 October 2024 10:18 · Howard Mustoe]

What should I do with my savings ahead of the Budget?

Ahead of the Budget on 30 October, there has been fevered speculation about changes to pension savers’ tax allowances and other perks.

Reports that pensioners could have tax breaks cut or axed led to savers withdrawing chunks of their retirement pots ahead of Chancellor Rachel Reeves’s big announcement.