Overview
- Officials told the Office for Budget Responsibility on Wednesday that the previously flagged income tax increase was off, replacing an earlier submission that had included the rise.
- The latest assessments reported by multiple outlets put the shortfall closer to £20bn than £30bn, yet the Chancellor still aims to create roughly £15bn of fiscal buffer ahead of the 26 November Budget.
- Financial markets reacted to the U-turn reports, with 10-year gilt yields rising about 0.11 percentage points to roughly 4.55%, while the pound and UK equities fell.
- Reeves is now weighing a mix of narrower measures such as extending or trimming income tax thresholds, a gambling levy, higher charges on expensive properties, and limits on pension tax relief or salary‑sacrifice schemes, according to reports.
- The Times reports a proposed levy on limited liability partnerships has been dropped after modelling suggested limited returns, a mooted ‘exit tax’ is in doubt, and business leaders continue to warn that rolling Budget uncertainty is hitting confidence and investment.