Chancellor Reeves Plans VAT Expansion Affecting 8 Million UK Families

Chancellor Rachel Reeves is considering broadening the VAT base, potentially targeting private healthcare and financial services, which could impact up to eight million UK families, though she has not ruled out maintaining current VAT rates ahead of the November budget. She has acknowledged the challenging economic environment and the need for difficult decisions to address the long-term damage to the economy. Reeves also plans to tackle youth unemployment by mandating paid roles for young people unemployed for 18 months, but experts warn this will only affect a small fraction of the 16 to 24-year-olds not in employment, education, or training. The Chancellor has confirmed that she may not be able to maintain the freeze on income tax thresholds, which have been static since 2021, causing more low- and middle-income earners to pay higher taxes due to wage inflation. Campaigns and a parliamentary debate have highlighted the impact of this freeze, with millions facing higher tax burdens and projections showing more nurses and teachers becoming higher-rate taxpayers by 2027–28. Despite concerns about tax increases, Reeves emphasizes her commitment to previous manifesto promises but indicates that economic realities may necessitate policy adjustments.