Budget 2024 live updates: Inflation falls to lowest rate in three years, Reeves ‘eyes £40bn’ in cuts and spending

Inheritance tax is a levy on the estate of someone who has died. This is their property, money and possessions. Crucially, it is not paid if the value of these things is below £325,000.

The tax rate is 40 per cent, but it’s only charged on the part of the estate that’s above the threshold. In 2023/24, only 5 per cent of deaths generated an inheritance tax bill, raising around £7 billion.

However, the IFS writes that the tax measure “is littered with special exemptions”. These include a business relief, the ability to pass on agricultural land tax-free, and the tax-free passing on of pension pots.

The economic think tank says that ending these measures alone would raise £4.8bn a year by 2029.

We would like to hear your thoughts on what you would like to see introduced in Reeves’ Budget. Should she focus on measures to support homeowners, such as the Freedom to Buy scheme? Or would you prefer a focus on closing tax loopholes, such as abolishing non-dom status, to ensure a fairer tax system?

Pension tax relief is a reduction of the amount of tax paid on private pensions. It helps workers save for retirement by boosting their pension pots.

The amount of tax relief a person is granted is based on their income tax. It will effectively cancel out tax on pension contributions up to a maximum of £60,000.

After this, contributions will be taxed at either 20, 40, or 45 per cent, depending on which income tax rate the worker falls into.

However, the chancellor is thought to be considering a flat 30 per cent pension tax relief rate. This would mean that higher earners would effectively pay 10 per cent in tax, while those on the additional rate would pay 15.

The measure would raise around £3 billion a year, with 7 million earners paying more tax. But it would be better news for basic rate earners, who would actually begin to receive a 10 per cent boost to their pension contributions.

Evaluating the idea last year, the IFS said it would “redistribute the burden of taxation from the bottom 80 per cent to the top 20 per cent of earners.”

It has been reported that Rachel Reeves is considering tweaking Capital Gains Tax at the 2024 Budget.

Capital Gains Tax (CGT) is paid on the profit made when an asset which has increased in value is sold. It is applied to things like the sale of personal possessions worth more than £6,000 (apart from a car), property that’s not the seller’s main home, shares and business assets.

It is charged at 10 or 18 percent for basic rate taxpayers, and 20 or 24 for higher or additional rate earners. There is a tax-free allowance of £3,000.

There are several ways CGT could be changed. In the run-up to the election, the Lib Dems and Greens both said they would rethink the tax bands to be more similar to income tax, raising an estimated £5.2bn a year.

Exclusive: Former Bank of England governor Mervyn King has made a dramatic intervention warning Rachel Reeves that she must raise national insurance in her Budget on 30 October.

The Independent’s political editor David Maddox reports:

Changes to capital gains, inheritance tax, pension savings and more – here’s your guide to what the Labour Budget on 30 October could have in store:

During the election Labour made a clear promise “not to raise taxes on working people”. This specifically included income tax, VAT and national insurance contributions.

The problem Rachel Reeves has as her first Budget approaches on 30 October is that somehow she has to pay for an estimated £25bn in spending commitments and encourage economic growth with little room for manoeuvre.

Her former Bank of England mentor Lord Mervyn King has warned her against extra borrowing even by rewriting the fiscals and suggested she raises national insurance instead to invest.

It is clear from the prime minister’s words this morning that national insurance rises on employer contributions is now a strong possibility. But does this mean a breach in the manifesto promises from just over 100 days ago?

The Tories say yes – they would – but so does the independent Institute for Fiscal Studies director Paul Johnson.

It appears that Labour are planning on using a lawyer’s way out – appropriate for the prime minister – to emphasise that their pledge was “for working people” not employers.

Hello and welcome to The Independent’s Budget 2024 live coverage where we’ll be bringing you the latest updates ahead of Labour’s fiscal event on 30 October.

Labour has been criticised in recent days for refusing to rule out an increase to employer national insurance contributions (NICs). Some experts say the measure would break their pledge to not raise taxes on working people – but officials have indicated that the government does not agree.

Institute for Fiscal Studies director Paul Johnson said the measure would be a “straightforward breach” of the Labour manifesto, but added that Ms Reeves will “almost certainly” need to break a manifesto commitment to meet her spending targets.

He says that a 1p hike in employer NICs would “probably not” be very damaging to jobs.

Shadow chief secretary to the Treasury Laura Trott 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.”

However, it has been pointed out that Ms Trott and her party had criticised Labour for not ruling out the measure in the run-up to the general election, implying they did not believe the manifesto had done so.