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Chancellor suggests she will place burden of balancing books on those with the ‘broadest shoulders’
Daily Telegraph 16/10/25
Rachel Reeves has signalled she will target tax rises on assets rather than earnings in the Budget as she ramps up her war on wealth.
Just weeks before she delivers her second Budget, the Chancellor said those with the “broadest shoulders” should contribute more to balancing the books. She also suggested higher earners would not be the main target of her tax raid.
Her latest comments will raise fears that Ms Reeves is preparing to target pension wealth or family homes to plug a black hole left by about-turns on welfare reform and higher borrowing costs.
Households with the most wealth tend to have residents that are at or above retirement age. In households where the head of the family is aged between 65 and 74, wealth averages more than £500,000, according to official data.
By contrast, it is just under £302,000 for households aged 45 to 54, and below £110,000 for those aged 25 to 34.
Speaking to reporters at the International Monetary Fund (IMF) meeting in Washington, the Chancellor said: “I do think that those with the broadest shoulders should pay their fair share of tax, and I think you can see that through my actions last year at the Budget.”
Asked how she would define a wealthy person, Ms Reeves responded: “Wealth is obviously different from income. So wealth is not about your your annual salary.”
Reeves: ‘Judge me by my record last year’
On Thursday, Ms Reeves ruled out introducing a targeted wealth tax. She also signalled that she would not increase taxes on banks, as she attempts to woo back businesses bruised by last year’s record tax raid.
“We’re not going to be introducing a wealth tax,” she said. “We already have a number of taxes, though, in the UK that do tax wealth and do tax wealthy people, and some of those we did increase in the Budget last year, like putting VAT on private schools, getting rid of the non-domicile status, extended taxes on private jets.
“I think that they were the right policies in the circumstances that we faced.”
Asked where she might look to raise taxes, Ms Reeves added: “Judge me by my record last year.”
Last October, Ms Reeves mounted an inheritance tax (IHT) raid on farms and family businesses as she also increased capital gains taxes on most assets.
Ms Reeves also gave her clearest indication yet that she would weaken the OBR’s power following recommendations by the IMF. She said she would discuss options with Kristalina Georgieva, the head of the IMF, on Thursday.
Ms Reeves is weighing up options including forecasts over a shorter time horizon or a more limited assessment that does not include whether Ms Reeves is meeting her tax and spending rules.
“I think with the forecasts as they are at the moment, it makes it hard just to have one major fiscal event a year,” she said.
Ms Reeves also said she was looking at increasing the wafer-thin buffer of £9.9bn she has to balance the books, but signalled that speculation about doubling or even trebling her headroom were wide of the mark.
She added: “Would I like more headroom? Of course I would, but that does come with trade-offs, because more headroom requires more tax revenue or less spending on public services like the NHS, so you’ve got to get the balance right.”
Banks to be spared
The Chancellor strongly suggested that she would spare banks from higher taxes in the Budget.
She acknowledged that levies faced by the banking sector were already higher in London than in other major banking hubs like Amsterdam, Frankfurt and Dublin.
Ms Reeves praised JP Morgan, the world’s biggest bank, for its investment in the UK and said she had held meetings with other global lenders in Washington.
“Financial services is one of our big success stories in the UK, and we want to make sure that we have a competitive environment,” she said.
Economists believe Ms Reeves will have to raise taxes by £30bn in the Budget to balance the books against a backdrop of high inflation and soaring borrowing costs.
Ms Reeves is rumoured to be targeting National Insurance contributions on landlords and has also been considering higher property taxes.
The Chancellor said said it was important to “get the balance right” as she suggested the Government would do more to try to attract global talent.
She also said the Government would do more to “bear down on prices” as she attempts to bring down inflation, which is currently running at 3.8pc, or almost twice the Bank of England’s 2pc target.
Highlighting the Government’s decision to freeze drug prescription charges in England at £9.90 this year, Ms Reeves said she would take action to remove the “pressure on family finances”.
She said: “We will continue to take action on on prices. Obviously, the Bank [of England] have got their job to do, but where there are regulated prices, of course we have all responsibility as well. I’m determined that we can bring inflation back to target.”
Despite the pledge to tackle inflation a Bank of England official said government policies were largely responsible for rising prices.
Catherine Mann, a member of the Bank’s Monetary Policy Committee, said one of the drivers of inflation had been “three years of national living wage dramatically above other wage developments”.
“I’m not saying it’s not a bad policy, I’m just saying it does have implications,” she added.
In April, the government increased the national living wage by 6.7pc to £12.21 an hour.
Ms Mann added the increase in employers’ National Insurance Contributions, which came into force in April, had also been “passed through” to prices.
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