Following last year’s Budget, which included unpopular changes to employers’ National Insurance (NI) and Inheritance Tax (IHT), some analysts suggest that her fiscal shortfall has actually grown, and Reeves now faces a £41 billion ‘black hole’ to fill.

The chancellor previously promised taxes wouldn’t rise for working people over the course of this parliament, and with the UK experiencing sluggish economic growth and rising inflation, increases in business taxes are also unlikely. This leaves her with very limited room for manoeuvre.

While nothing is certain until the Budget, based on what the government needs and its available options, the following measures are under discussion.

In last year’s Budget, IHT was a major focus of reform, as it was announced that pensions are set to come within its scope from 2027, and both Business Relief and Agricultural Relief would be scaled back.

Despite already being hit hard, reports suggest further changes in IHT could be announced. These might include:

• A lifetime cap on gifts made before death – This would limit the amount you can gift while still living, meaning more of your estate would be liable for IHT.
• Reforms to the taper relief system – Similar to the above, changing the rules around taper relief and potentially exempt transfers could bring more of your estate into the scope of IHT.
• Extending the freeze on nil-rate bands – The current standard nil-rate band of £325,000 was set in 2009. The freeze is due to last until 2028, but Reeves could extend it a further two years to 2030.

The UK currently has the lowest investment rate in the G7, and the government is looking to address this, potentially by making changes to ISAs.

In her recent Mansion House Speech, Reeves avoided introducing any major reforms to ISAs, despite wide speculation that she would do so. However, she did say that changes remain on the table, and the Autumn Budget is when they are most likely to be announced.

IFA reports that there is around £294 billion held in Cash ISAs, and Reeves could introduce limits to help move some of those savings into investments via Stocks and Shares ISAs.

This might involve maintaining the £20,000 annual ISA allowance, but limiting Cash ISA contributions, perhaps to as low as £4,000, to encourage further investment in Stocks and Shares ISAs.

The Income Tax thresholds for the basic and higher rates have been frozen since 2021, and the additional rate since 2022, and they are set to remain so until 2028. However, Reeves could extend the freeze to 2030 to help boost Income Tax revenue.

If this happens, more people might experience fiscal drag, where wage growth and inflation pull them into a higher tax bracket even though tax rates and thresholds remain the same.

This is known as a ‘stealth tax’ as it doesn’t involve raising taxes but still leads to higher revenues for the government.

This measure is likely to be attractive for Reeves, as it could give her considerably more breathing room while also allowing her to stick to her promise of not raising taxes on working people.

Pensions are already set to fall within the scope of IHT from 2027, and further reforms may follow.

One suggestion is the introduction of a flat rate of tax relief on pension contributions. Under the current system, you can claim back Income Tax at your marginal rate on pension contributions up to your Annual Allowance.

The first 20% is automatically relieved, and if you’re a higher- or additional-rate taxpayer, you can claim the further 20% or 25% via self-assessment.

However, a flat rate of tax relief would see all pension contributions relieved at the same rate, perhaps around 25%.

As well as the above, Reeves could also introduce several other measures to help make up the fiscal shortfall.

For example, she could align Capital Gains Tax (CGT) with Income Tax rates, or she might introduce a new form of NI for landlords. There has also been talk of a wealth tax, though this remains unlikely.

Additionally, the chancellor may introduce some measures to help boost taxpayers, such as extending the freeze on Fuel Duty to help with the cost of living. This could be useful for consumers as energy prices are set to rise again this year.

It’s important to remember that the potential changes outlined here, along with any other speculation you may have seen, remain unconfirmed. So, it’s a good idea to remain calm and avoid making any changes to your plan until the Autumn Budget has taken place.

Working with an Amber River financial planner can give you peace of mind that you’re investing tax-efficiently, no matter the complex and rapid changes in the financial landscape.