Rachel Reeves lines up £25bn tax blitz in ‘awful’ April – beats anything we’ve seen so far
This April is going to be tough, and Chancellor Rachel Reeves has a role in it. The UK economy is about to face higher taxes and rising prices starting next month.
Last October, Chancellor Rachel Reeves announced a series of tax increases totaling £40 billion, the largest since 1993. This decision upset businesses, farmers, entrepreneurs, taxpayers, and consumers. Many companies have stopped investing, jobs are being cut, and people are spending less due to worries about the impact.
As a result, the economy is slowing down significantly. But here’s the catch: most of these tax increases haven’t even taken effect yet.
A few changes have already started, like higher capital gains tax rates (18% for basic taxpayers and 24% for higher taxpayers). However, the biggest tax hikes will begin in April, which is less than four weeks away. This will hurt.
The largest tax increase is a £25 billion rise in employer National Insurance (NI) contributions. Starting next month, the rate will go up from 13.8% to 15%, and it will apply to wages above £5,000 instead of £9,100. On top of that, Reeves is also raising the minimum wage by 6.7%.
Businesses like retailers, restaurants, and care homes will struggle to handle these changes. Some may even shut down. To survive, businesses might raise prices, cut jobs, or both.
Business rates (taxes on properties) are also going up in April, causing companies like HMV to cancel expansion plans.
Reeves isn’t just targeting businesses. Stamp duty thresholds (taxes on property purchases) are also rising in April, which could slow down the housing market and affect industries like construction and furniture.
Additionally, income tax and NI thresholds are frozen until 2028, meaning more people will end up paying higher taxes each year due to inflation. This freeze, started by the Conservatives in 2022, will bring the government an extra £45 billion from taxpayers.
But that’s not all. Council tax is set to rise by up to 5% in April, and gas, water, broadband, and mobile bills are also increasing. April is shaping up to be a very difficult month.
The timing couldn’t be worse. In the US, President Donald Trump’s trade threats against countries like Canada, China, and Mexico are causing global market instability. UK exporters are worried about what might happen next.
The cost-of-living crisis was supposed to ease by now, but inflation is rising again, even before April’s price hikes take effect. And there’s more: Reeves might announce even more tax increases in her Spring Statement on March 26. Get ready for a rough ride.
