Which tax rises could the Labour government introduce in the autumn budget?

Published

8 months ago

August 27, 2024

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There’s going to be “a lot of bad news” in the chancellor’s autumn budget – which the prime minister has said will be “painful”.

Speaking from Downing Street, Sir Keir Starmer said the public will have to “accept short-term pain for long-term good“.

Sky’s economics and data editor Ed Conway heard there was going to be “a lot of bad news” in the fiscal event as the government continues to remind voters about its financial inheritance from the Tories, with borrowing at levels not seen since the pandemic.

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Rachel Reeves’s first budget on 30 October will be “quite miserable”, Conway has said – with spending cuts and tax rises both expected.

The latter is something Ms Reeves herself has admitted will be on the cards, though Sir Keir vowed in its election manifesto that income tax, national insurance, and VAT wouldn’t budge – remaking the pledge in August.

With that in mind, Sky News looks at which ones could be targeted.

Inheritance tax

This is one of the taxes most likely to be changed.

Inheritance tax is charged at 40% on the value of an estate above £325,000 when someone dies.

The tax rate could be increased, or the value people have to pay inheritance from could be lowered to raise money.

There are currently several exemptions, including on agricultural land and family businesses, but these could be lifted to include them.

The government could also reduce the number of years allowed when giving away assets before someone dies before inheritance tax kicks in.

A leaked recording from March revealed now chief secretary to the Treasury, Darren Jones, saying inheritance tax could be used to “redistribute wealth” and address “intergenerational equality”.

Capital gains tax

Capital gains is imposed on the profit from the sale of capital assets, including second homes, shares, business assets and most personal possessions worth £6,000 or more, apart from cars.

Currently, people do not have to pay tax on the first £3,000 of profits, or £1,500 for trusts.

The minimum limit could be removed and the tax could be imposed on assets currently exempt.

Like inheritance tax, it is one of the taxes that is being most talked about to be targeted.

Council tax

In the leaked recording from Mr Jones, he said he was frustrated by the “out of date” council tax system and hinted homes worth over £1m may have to pay more.

Former shadow minister Jonathan Ashworth told Sky News during the election campaign that Labour would not change council tax bands.

Council tax is currently set in bands that are based on the 1991 value of homes, which has been branded “absurd” by the Institute for Fiscal Studies (IFS) and “incredibly poorly designed” by the Institute for Government “(IfG).

Gemma Tetlow, chief economist at the IfG, said council tax could be reformed “in a very sensible way… rather than having the banded system you could move to something that is much more proportional tax on land revenue”.

She added: “You could do that sensible structural reform and raise some extra money at the same time.”

Business rates

Labour are understood to be consulting on changing business rates, which are charged on most non-domestic properties with relief for some including small businesses, retail, hospitality and leisure properties.

A change could be made so they are related to the value of the land instead of the current rateable value, which is an estimate of how much it would cost to rent that property for a year in April 2021.

Stamp duty

Stamp duty is paid on the cost of a property over £250,000, with more paid for second homes and by non-UK residents, and relief for first-time buyers.

It currently discourages people from moving home and is part of the reason older people are not moving out of expensive, larger properties.

Labour could change the tax so it is focused on annual land value tax instead of on a transaction – but that could be a hard sell with the party.

UK

Eight arrests in connection with two separate terrorism investigations

Published

4 hours ago

May 4, 2025

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Eight arrests in connection with two separate terrorism investigations

Eight men have been arrested by the Metropolitan Police in two unconnected but “significant” terrorism investigations.

In one operation on Saturday, counter-terror officers arrested five men – four of whom are Iranian nationals – as they swooped in on various locations around the country. All are in police custody.

The Met said the arrests related to a “suspected plot to target a specific premises”.

In an update shortly after midnight, the force said: “Officers have been in contact with the affected site to make them aware and provide relevant advice and support, but for operational reasons, we are not able to provide further information at this time.”

Commander Dominic Murphy, head of the Met’s Counter Terrorism Command, said: “Counter-terrorism policing, supported by police and colleagues from across the country, have conducted arrests in two really significant operations, both of which have been designed to keep the public safe from threats.

“There are several hundred officers and staff working on this investigation, and we will work very hard to ensure we understand the threats to the wider public.”

He refused to say if the plot was related to Israel, but described it as “certainly significant” and said “it is unusual for us to conduct this scale of activity”.

He also asked the public to “avoid speculation and some of the things that are being posted online”.

MI5 director general Ken McCallum said in October that the intelligence agency had responded to 20 “potentially lethal” Iran-backed plots since 2022. He warned of the risk of an “increase or broadening of Iranian state aggression in the UK”.

Children ‘petrified’ by armed police

Rochdale resident Kyle Warren, who witnessed one of the arrests at a neighbouring house, said his children had been playing in the garden when they came running into the house, saying a man in a mask had told them to go inside.

“Obviously, I was a bit worried,” Mr Warren told Sky News’ Lisa Dowd, and so he went into the garden to investigate.

“As we’ve come out, we just heard a massive bang, seen loads of police everywhere with guns, shouting at us to get inside the house.”

From upstairs in his house, he then heard “loads of shouting in the house” and saw a man being pulled out of the back of the house, “dragged down the side entry and thrown into all the bushes and then handcuffed”.

There were about 20 to 30 officers with guns, he believes.

“It’s just shocking, really. You don’t expect it on your doorstep.”

His daughters were “petrified… I don’t think they’ve ever seen a gun, so to see 20 masked men with guns running round was quite scary for them”.

Mr Warren, who only moved into his house a year ago, said he had “never really seen anyone going in or out” of the house and actually thought it was empty.

Arrests and searches around the country

The Met added officers were carrying out searches at a number of addresses in the Greater Manchester, London and Swindon areas in connection with the investigation.

It said those detained were:

• A 29-year-old man arrested in the Swindon area
• A 46-year-old man arrested in west London
• A 29-year-old man arrested in the Stockport area
• A 40-year-old man arrested in the Rochdale area
• A man whose age was not confirmed arrested in the Manchester area.

Terror arrests in separate investigation

Police also arrested three further Iranian nationals in London on Saturday as part of another, unrelated counter-terror investigation.

The suspects were detained under section 27 of the National Security Act 2023, which allows police to arrest those suspected of being “involved in foreign power threat activity”.

Home Secretary Yvette Cooper said: “These were two major operations that reflect some of the biggest counter state threat and counter terrorism operations that we have seen in recent years.

“This reflects the complexity of the kinds of challenges to our national security that we continue to face.”

Earlier, she thanked police and security services in a statement, and called the incidents “serious events that demonstrate the ongoing requirement to adapt our response to national security threats”.

Last year, the government placed the whole of the Iranian state – including its intelligence services – on the enhanced tier of the new foreign influence registration scheme.

It means anyone asked by Iran to carry out actions for the state must declare it, or face prison time.

UK

Terror arrests came in context of raised warnings about Iran, with ongoing chaos in its own backyard

Published

4 hours ago

May 4, 2025

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Terror arrests came in context of raised warnings about Iran, with ongoing chaos in its own backyard

These are two separate and unrelated investigations by counter-terror officers.

But the common thread is nationality – seven out of the eight people arrested are Iranian.

And that comes in the context of increased warnings from government and the security services about Iranian activity on British soil.

Last year, the director general of MI5, Ken McCallum, said his organisation and police had responded to 20 Iran-backed plots presenting potentially lethal threats to British citizens and UK residents since January 2022.

He linked that increase to the ongoing situation in Iran’s own backyard.

“As events unfold in the Middle East, we will give our fullest attention to the risk of an increase in – or a broadening of – Iranian state aggression in the UK,” he said.

The implication is that even as Iran grapples with a rapidly changing situation in its own region, having seen its proxies, Hezbollah in Lebanon and Hamas in Gaza, decimated and itself coming under Israeli attack, it may seek avenues further abroad.

The government reiterated this warning only a few weeks ago, with security minister Dan Jarvis addressing parliament.

“The threat from Iran sits in a wider context of the growing, diversifying and evolving threat that the UK faces from malign activity by a number of states,” Jarvis said.

“The threat from states has become increasingly interconnected in nature, blurring the lines between: domestic and international; online and offline; and states and their proxies.

“Turning specifically to Iran, the regime has become increasingly emboldened, asserting itself more aggressively to advance their objectives and undermine ours.”

As part of that address, Jarvis highlighted the National Security Act 2023, which “criminalises assisting a foreign intelligence service”, among other things.

So it was notable that this was the act used in one of this weekend’s investigations.

The suspects were detained under section 27 of the same act, which allows police to arrest those suspected of being “involved in foreign power threat activity”.

Those powers are apparently being put to use.

UK

Pictured: Boy killed in Gateshead industrial estate fire – 14 children arrested on suspicion of manslaughter

Published

4 hours ago

May 4, 2025

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Pictured: Boy killed in Gateshead industrial estate fire - 14 children arrested on suspicion of manslaughter

Tributes have been paid to 14-year-old Layton Carr who died in a fire at an industrial estate.

Eleven boys and three girls, aged between 11 and 14 years, have been arrested on suspicion of manslaughter after the incident in Gateshead on Friday. They remain in police custody.

Firefighters raced to Fairfield industrial park in the Bill Quay area shortly after 8pm, putting out the blaze a short time later.

Police then issued an appeal for a missing boy, Layton Carr, who was believed to be in the area at the time.

In a statement, the force said that “sadly, following searches, a body believed to be that of 14-year-old Layton Carr was located deceased inside the building”.

Layton’s next of kin have been informed and are being supported by specialist officers, police added.

A fundraising page on GoFundMe has been set up to help Layton’s mother pay for funeral costs.

Organiser Stephanie Simpson said: “The last thing Georgia needs to stress trying to pay for a funeral for her Boy Any donations will help thank you.”

One tribute in a Facebook post read: “Can’t believe I’m writing this my nephew RIP Layton 💔 forever 14 you’ll be a massive miss, thinking of my sister and 2 beautiful nieces right now.”

Another added: “My boy ❤️ my baby cousin, my Layton. Nothing will ever come close to the pain I feel right now. Forever 14. I’ll miss you sausage.”

A third said: “Rest in peace big lad such a beautiful soul taken far to soon my thoughts are with you Gee stay strong girl hear for u always.”

Detective Chief Inspector Louise Jenkins, of Northumbria Police, also said: “This is an extremely tragic incident where a boy has sadly lost his life.”

She added that the force’s “thoughts are with Layton’s family as they begin to attempt to process the loss of their loved one”.

They are working to establish “the full circumstances surrounding the incident” and officers will be in the area to “offer reassurance to the public”, she added.

A cordon remains in place at the site while police carry out enquiries.