The taxes Labour could raise to plug spending shortfalls

Rachel Reeves has warned she needs to make "tough decisions" to restore economic stability to the UK, and that could include tax rises.

Speaking to Parliament this week to outline the spending inheritance left by the previous Tory government, the chancellor highlighted £22 billion of "unfunded and undisclosed" costs. 

She outlined a range of measures to curb spending, such as scrapping certain rail and road projects and restricting winter fuel payments to poorer pensioners, saying "if we cannot afford it, we cannot do it".

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Her words could "pave the way for a tax-raising autumn Budget" on 30 October, said the Financial Times. 

Labour promised not to raise taxes on "working people" in its general election manifesto, said The Guardian, ruling out increases in income tax, VAT, National Insurance and corporation tax.

The government has already confirmed that it will add VAT to private school fees. Here are some other taxes that it could still increase.

Capital gains tax

Capital gains tax (CGT) is charged on the sale of assets such as shares and funds outside an ISA or additional properties.

The current rate for higher-rate taxpayers is 20% for profits above £3,000 from investments or 24% for additional property sales that aren’t your main residence.

This is "far lower" than the higher income tax rate of 45%, said The Telegraph, and Reeves has been "careful not to rule out increasing CGT".

One proposal is to bring it in line with income tax, added the newspaper, which could raise £16.7 billion a year, but it doesn't account for how it would affect tax planning, meaning people may hold on to rather than sell assets.

Inheritance tax

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

A "number of tweaks" could bring in revenue for the government, said The Times, such as increasing the IHT rate.

The tax is also "littered with exemptions", said the Institute for Fiscal Studies, such as business relief and passing on pensions tax-free, which could be restricted by the government.

Pension tax relief

Labour is reviewing the pensions market and could look at "radical reforms to pension tax relief", said This Is Money.

This could mean restricting the relief on contributions at 20% rather than the 40% or 45% higher and additional rate taxpayers receive.

Replacing higher and additional relief with a flat rate of 30% could raise £2.7 billion annually, according to the IFS.

But reforming tax rules "could prove challenging", said MoneyWeek, as it would involve "dismantling public sector schemes” and could “discourage pension saving".

How to prepare for a potential tax raid

You may want to sell additional property or investments "sooner rather than later", said RTS Financial Planning, if you were planning to sell anyway.

If you are worried about inheritance tax, making use of your gifting allowances to bring down the value of your estate can also "reduce tax liabilities", said Hargreaves Lansdown. 

Any changes to pensions could be "years away", said MoneyWeek, but it still makes "good financial sense" to save as much as you can, while "potentially cutting your income tax bill too".