The UK government is set to announce major changes to how it spends money, and this could affect your wallet in several ways. Chancellor Rachel Reeves will reveal the Autumn Budget on October 30, showing how the government plans to handle a £22 billion hole in public finances.
You might be wondering what this means for your money. The truth is, many people will likely face higher taxes. The government needs cash, and raising taxes is one way to get it. They promised not to increase rates for income tax, national insurance, or VAT, but there are other ways they can collect more money from taxpayers.
One possible change involves inheritance tax. Right now, you can pass on property worth up to £500,000 (or £1 million for married couples) without paying this tax. The government might reduce these allowances, meaning more families would have to pay taxes when someone dies.
Capital gains tax might also go up. This is the tax you pay when selling something for more than you bought it for – like shares or a second home. The rates could rise from the current 10-20% range to match income tax rates, which can be as high as 45%.
Pension tax relief is another area that could change. Currently, when you put money into a pension, the government adds back the tax you paid on that money. Higher earners get more relief, but this might be scaled back to save the government billions of pounds.
Council tax bills are already expected to rise by about 5% next year. This is lower than recent increases but still adds to household costs during tough economic times.
The spending review isn’t just about taking more money – it’s also about how the government will use that money. Public services like healthcare, education, and transportation need funding, but hard choices must be made about priorities.
Some good news might come for state pensioners. Under the “triple lock” system, state pensions should increase by 4% next April, matching wage growth. This would mean about £460 more per year for those on the full new state pension.
Benefits like Universal Credit might rise by the same 4% to help those on low incomes deal with living costs, though this isn’t guaranteed yet.
Housing remains a major concern for many people. The government has promised to build 1.5 million new homes over five years, but funding details are still unclear. First-time buyers are hoping for support schemes to help them get on the property ladder.
For parents, there might be announcements about childcare funding. The government previously promised to expand free childcare hours, but the spending review will show if they can afford to follow through with these plans.
Small business owners should watch for changes to business rates and potential support measures as the economy faces challenging conditions.
Transport users might see changes to funding for roads, railways, and bus services. This could affect ticket prices and service quality in different parts of the country.
The spending review happens while the UK economy is growing very slowly – just 0.5% in the last year. The government must balance the need to support economic growth with getting public finances under control.
As we wait for the announcements, financial experts suggest reviewing your tax situation now. Making the most of current allowances before any changes take effect could save you money in the long run.
Remember that whatever happens in the spending review, good money management always helps. Building an emergency fund, paying down high-interest debt, and planning for the future remain smart financial moves regardless of government policy changes.
