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last mo.

IFS Urges Reeves to Pursue Tax Reforms, Not Quick Fixes, as Budget Gap Looms

The think tank says tens of billions could be raised through changes to property, inheritance and capital gains rules without touching income tax, VAT or employees’ national insurance.

British Chancellor of the Exchequer Rachel Reeves attends the annual Mansion House dinner in London, Britain, July 15, 2025. REUTERS/Isabel Infantes/File Photo
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Rachel Reeves, with Labour's Fiscal Plan during the launch of Labour's general election manifesto on June 13, 202 (Photo: Anthony Devlin/Getty Images)

Overview

  • Economists estimate a £30bn–£50bn shortfall before the 26 November Budget, intensifying pressure on the Chancellor to find revenue within Labour’s manifesto constraints.
  • The IFS lists options including ending capital gains tax relief on death (about £2.3bn by 2029–30), doubling council tax on bands G and H (around £4.4bn), abolishing the residence nil-rate band in inheritance tax (roughly £6bn), raising bank levies, and tightening corporate tax compliance.
  • The report calls the council tax system outdated and backs longer-term reform to replace stamp duty and council tax with a recurrent property tax based on updated values.
  • The IFS warns against an annual wealth tax and against restricting pension tax relief, and says extending the freeze on income tax and NI thresholds could raise about £10.4bn but would breach the pledge not to raise taxes on working people.
  • Some outlets report the Treasury has not ruled out a one-off wealth levy, which remains unconfirmed, as political debate intensifies with Conservatives urging abolition of stamp duty.