As Chancellor Jeremy Hunt prepares to unveil the next UK Budget, speculation is mounting over potential tax increases that could squeeze household finances even further. Experts suggest the government may target income tax thresholds, property levies, and savings to balance the books.
Income Tax: Frozen Thresholds Bite Harder
One of the most likely moves is maintaining the freeze on income tax thresholds, dragging more earners into higher tax brackets as wages rise with inflation. The personal allowance, currently £12,570, and the higher-rate threshold of £50,270, have been frozen until 2028—effectively a stealth tax rise.
Property Taxes: Council Hikes and Stamp Duty Tweaks
Homeowners could also face higher bills, with council tax expected to rise by up to 5% in many areas. Meanwhile, rumours swirl that Hunt may adjust stamp duty rules, potentially reducing relief for first-time buyers or increasing rates for second homes.
Savings and Investments: Capital Gains in the Crosshairs
Investors may not escape unscathed either. The capital gains tax allowance, already halved this year to £6,000, could be slashed further to £3,000. Similarly, the dividend allowance—set to drop from £1,000 to £500 in April—might see additional cuts.
Inheritance Tax: Will the Threshold Stay Frozen?
The inheritance tax nil-rate band has been stuck at £325,000 since 2009, with experts predicting no change despite soaring property prices pulling more estates into the tax net.
What It Means for You
While the full picture won’t emerge until Budget day, households should prepare for tighter finances. Checking tax codes, reviewing investments, and exploring allowances now could soften the blow.
