Chancellor Rachel Reeves Faces £30bn Deficit Challenges Amid Tax Rise Debates

Chancellor Rachel Reeves is considering significant tax changes in her upcoming Autumn Budget to address a £30 billion fiscal shortfall. Proposals include reducing the annual cash ISA limit from £20,000 to £10,000 to encourage investment over cash savings and potentially raising the main income tax rate by 1p, which could generate around £8 billion, marking the first income tax increase since the 1970s. While raising taxes on higher earners remains a possibility, Reeves is cautious about the political fallout, especially given Labour's manifesto commitments not to increase income tax on working people. There is also concern within financial services about potential tax hikes on pensions, dividends, and capital gains, which could undermine consumer confidence and affect UK stocks. Additionally, plans to tax high-earning professionals working through limited liability partnerships (LLPs), including NHS GPs, have drawn warnings about negative impacts on healthcare provision and staffing. Overall, these proposed tax measures aim to plug the fiscal gap but face significant political and economic challenges.