Labour’s first budget in 14 years will be delivered on 30 October, and as per the warnings of Rachel Reeves and Sir Keir Starmer, it will not be one the public is likely to welcome.

The chancellor and prime minister have spent months preparing the stage for a “painful” budget, where tax rises are likely in order to help fill the £22bn financial black hole Ms Reeves said she uncovered on entering No 11 Downing Street.

While Labour promised not to increase taxes on working people during the election campaign, the chancellor did leave some wriggle room that is now a point of speculation ahead of the budget.

Here Sky News takes a look at what measures could be included in the budget and what they could mean.

Sunak tries to wrong-foot Starmer- politics latest

Employer national insurance contributions

National insurance contributions are the UK’s second-largest tax and are expected to raise just under £170bn in 2024-25, about a sixth of all tax revenue, according to the Institute for Fiscal Studies (IFS).

They are paid by employees and the self-employed on their earnings, and by employers on the earnings of their staff – and at a higher rate than staff members themselves pay.

While Labour repeatedly promised not to increase taxes on “working people” during the election campaign – that is, VAT, national insurance and income tax – what it did not rule out was the possibility of increasing employer national insurance contributions.

Employers currently pay 13.8% on their staff earnings, but the tax does not apply to employee pension schemes – this is something the chancellor could now target in the budget, with the IFS saying it could raise £17bn a year.

The Tories have accused Labour of breaking their manifesto promise not to increase national insurance – although Labour believes it made clear the distinction between employees and employers.

Laura Trott, the shadow chief secretary to the Treasury, said: “In 2021, the chancellor said increasing employer national insurance was a tax on ‘workers’.

“That’s why even in her own words it breaks Labour’s manifesto promise not to increase tax on working people.”

Pension changes

Another measure the chancellor is reportedly considering is reducing the amount people can take out of their pensions tax-free.

At present, the tax-free lump sum most people over the age of 55 can take from their pension pot is 25%, up to a maximum of £268,275.

But according to The Telegraph, government officials have asked a major UK pension provider to look into the impact of cutting that amount to £100,000.

Financial advisers are said to be receiving a growing number of calls from clients wanting to cash in their 25% tax-free lump sum ahead of the budget.

Meanwhile, other changes Ms Reeves could make to pensions in a bid to raise revenue is charging national insurance on private pension incomes; introducing income tax on all inherited pensions and making pension pots liable to inheritance tax in the same way as other assets.

Inheritance tax

At present, inheritance tax – dubbed “the most hated tax” by the Tories – is charged at 40% and applies to estates worth more than £325,000.

There are, however, allowances that can mean it’s only paid on more valuable estates.

If a main residence is being passed to children or grandchildren a £175,000 allowance is added, meaning only amounts of £500,000 are subject to inheritance tax.

The tax rate could be increased, or the value people have to pay inheritance from could be lowered – while several exemptions – including on agricultural land and family businesses – could also be lifted.

Capital gains tax

Given the government’s pledge not to increase the three main taxes, there has been speculation that Labour could set its sights instead on capital gains tax.

Capital gains tax is the tax levied on the profit made on the sale of an asset that has risen in value – including second homes, shares, business assets and most personal possessions worth £6,000 or more, apart from cars.

👉 Tap here to follow Politics at Jack and Sam’s wherever you get your podcasts 👈

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

The tax-free threshold could be removed and the tax could be imposed on assets that are exempt now.

Alternatively, the tax rate could be increased. Capital gains tax is between 20-28% for those who pay higher rates of income tax, but could be increased to as much as 39%, according to The Guardian.

Asked about capital gains tax recently, the prime minister appeared to dismiss the idea it could be raised to as much as 39%, saying much of the budget speculation that had emerged so far was “wide of the mark”.

Council tax

Another solution the government could reach for is reforming the council tax system so the bands are changed.

Currently council tax is set in bands that are based on the 1991 value of homes, which has been branded “absurd” by the IFS and “incredibly poorly designed” by the Institute for Government.

Former shadow minister Jonathan Ashworth told Sky News during the election campaign that Labour would not change council tax bands – but there has nevertheless been reports the government could replace the banding system in favour of a 0.5% tax on the value of a property per year.

Read more politics news:
Chancellor Rachel Reeves looking to ‘find £40bn’ in budget
PM urged to support ban on smartphones in schools
Don’t use Ozempic for ‘Instagram perfect body’, says health secretary

This would mean that someone in a property worth £350,000, for example, would pay £1,750 a year.

There was also speculation that the government could scrap the 25% council tax discount for single-occupant households, but this has subsequently been ruled out.

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.

Those buying their first home are entitled to relief in order to help people get on to the housing ladder – but this is due to be cut from April next year.

Labour has confirmed the threshold for stamp duty for first-time buyers will fall back to £300,000, after it was raised to £425,000 in 2022 by Rishi Sunak.

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.

Gambling tax

A report in The Guardian recently suggested the government was considering hiking taxes on “higher harm” products such as online casino games, in a move the left-leaning Institute for Public Policy Research said could raise up to £3.4bn by 2030.

The newspaper claimed the 15% general betting duty, levied on high-street bookmakers’ profits, could be doubled, while remote gaming duty could go from 21% to 50%.

Fuel duty

In 2022 Mr Sunak cut fuel duty by 5p – until March next year.

This could be scrapped, with the RAC saying the cut costs the Treasury £2bn a year.

Fuel duty has otherwise been frozen for more than a decade.

David Cameron has told Sky News he planned to sanction two Israeli ministers while in government but “ran out of time” – as Sir Keir Starmer said he was considering the move over their “abhorrent” comments.

In an interview with Kay Burley, the former foreign secretary called on Sir Keir to “find a way” to penalise Israeli finance minister Bezalel Smotrich and national security minister Itamar Ben-Gvir.

Mr Smotrich has been criticised for suggesting it might be “just and moral” to withhold food aid from Gaza, while Mr Ben-Gvir has backed the expansion of illegal settlements in the West Bank.

Politics latest: Sunak tries to wrong-foot Starmer

Lord Cameron said he had been looking at imposing the sanctions himself before the general election.

He told Sky News he believed the move to put pressure on Israel was a “better option” than a partial arms embargo, which Foreign Secretary David Lammy announced in September.

Lord Cameron said: “I was looking at the things we could do to say to the Israelis we back your right to self-defence… but at the same time, we do want you to try and obey… humanitarian law.

“And these two ministers are people who have tried, they’ve encouraged you, to stop aid getting into Gaza and encouraged the extreme settlers in the West Bank to carry out illegal acts.

“So it seemed to me it was worth looking at whether we could sanction these two individual ministers.”

Lord Cameron said he ultimately didn’t enact the measures because he was advised “that it was quite a political act in the wrong direction”, adding that “we sort of ran out of time”.

“I mention it because we now have 100 days of the new government, and it seems to me looking at that is actually a better option than what they’ve done in terms of the partial arms embargo on Israel, because we do back Israel’s right to self-defence,” he said.

You can watch Kay Burley’s full interview with David Cameron on Sky News from 6am on Thursday.

Sir Keir told MPs earlier on Wednesday that he was “looking at” the option of sanctioning the two Israeli ministers.

The PM said Mr Smotrich and Mr Ben-Gvir had made “abhorrent” comments about the situation in the Gaza Strip and the West Bank.

“The humanitarian situation in Gaza is dire,” he added.

“The death toll has passed 42,000 and access to basic services is becoming much harder.

“Israel must take all possible steps to avoid civilian casualties, to allow aid into Gaza in much greater volumes, and provide the UN humanitarian partners the ability to operate effectively.”

Read more:
Follow live updates on Middle East conflict
‘Life was beautiful’: How Gaza has changed in last year
Timeline of events in year of war in Middle East

Reacting to the prime minister’s comments, Mr Ben-Gvir told Israeli media that “just as before the establishment of the Jewish state the British worked to make it impossible, now they continue to do so after its establishment in the midst of an existential war”.

He said “the days of the British Mandate” – which saw the UK govern what was then Mandatory Palestine – “are over”.

Mr Ben-Gvir added: “They do not scare me, and I will continue to act in accordance with the supreme national interests of the state of Israel only and for the people of the country.”

The UK government has announced a fresh wave of sanctions in response to violence by “extremist Israeli settlers” in the West Bank.

The measures target three outposts and four organisations that have supported and perpetrated “heinous abuses of human rights” against Palestinian communities in the occupied territory, Mr Lammy said.

👉 Click here to listen wherever you get your podcasts 👈

The UK has also called an urgent meeting of the UN Security Council as the humanitarian situation in northern Gaza deteriorates.

Mr Lammy said access to basic services is “worsening” and the UN has reported “barely any food has entered in the last two weeks”.

A private individual is paying for a flight to repatriate Alex Salmond’s body after the Foreign Office rejected requests for the RAF to get involved.

The former first minister and SNP leader collapsed and died after delivering a speech on Scottish independence in North Macedonia on Saturday.

The UK and Scottish governments had been in talks about the return of Mr Salmond’s body.

David Davis, Conservative MP and close friend of Mr Salmond, had led calls for the armed forces to get involved.

A private aircraft is now being chartered, which is being paid for by a private citizen. The flight is expected to land in Aberdeen.

Officials are arranging the final logistics on Wednesday afternoon.

Kenny MacAskill, acting leader of the Alba Party, said Mr Salmond’s widow and family were “incredibly grateful” for the support.

He said: “It brings a great deal of comfort to Moira and other members of the family to know that he will soon be home with them.”

Mr MacAskill also expressed the Salmond family’s appreciation to the North Macedonian government, for “expediting” the process of releasing Mr Salmond’s body and the Scottish and UK governments for their work in securing his repatriation.

There had been lengthy discussions between Scotland’s Deputy First Minister Kate Forbes and the UK government’s Europe minister.

There had been concerns about breaking the precedent of the RAF only repatriating the bodies of members of the Royal Family.

Witnesses say Mr Salmond, a nationalist stalwart, fell into the arms of a colleague at a lunch following the Cultural Diplomacy summit in Ohrid on Saturday afternoon.

The 69-year-old’s family confirmed the cause of death was a heart attack in a statement issued on Monday evening.

Follow Sky News on WhatsApp

Keep up with all the latest news from the UK and around the world by following Sky News

Tap here

The King led tributes to Mr Salmond, who led Scotland to the brink of independence in the historic 2014 referendum.

In a message issued by Buckingham Palace, the King said he and the Queen were “greatly saddened” to hear of Mr Salmond’s “sudden death”.

A book of condolence has opened at the Scottish parliament for visitors to leave messages that will be sent to Mr Salmond’s family.

Read more:
The political titan that was Alex Salmond
Scottish independence is looking for a new star
Book of condolence opens at Scottish parliament

Mr Salmond served as first minister of Scotland from 2007 to 2014 and was leader of the SNP on two occasions, from 1990 to 2000 and from 2004 to 2014.

He launched his rival Scottish independence party, Alba, in 2021 after his relationship with his successor Nicola Sturgeon fractured.

The pair never spoke again.

A Scottish government spokesperson said: “The loss of a loved one is a difficult time for any family, made more complex when they have passed away overseas.

“Over the last few days the Scottish government and UK government have been engaging with Alex Salmond’s family and working closely together in accordance with their wishes, to ensure the swift and dignified repatriation of the former first minister to Scotland.

“Having explored a number of options, the family have now made arrangements for this to take place with the support of a private citizen.

“The Scottish government continues to engage with Mr Salmond’s family, and we stand ready to offer further advice and support, should it be required.”