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The first Labor budget for 14 years will be presented by Chancellor Rachel Reeves on Wednesday October 30. She warned it would involve “difficult decisions”.
Government sources told the BBC the budget would include tax rises and spending cuts worth £40 billion.
What is the budget?
Every year, the chancellor – who is in charge of the government's finances – makes a budget statement to MPs in the House of Commons.
It outlines the government's plans to raise or lower taxes. It also involves important decisions about spending in areas such as health, schools, police and other public services.
The previous Conservative chancellor, Jeremy Hunt, presented the last budget in March, before the general election.
After a change of government, the new chancellor presents a new budget to define his priorities.
When will the fall budget take place and what time will the speech take place?
The fall 2024 budget will take place on Wednesday, October 30.
The Budget speech usually starts around 12:30 UK time and lasts around an hour. It will be broadcast live on BBC iPlayer and on the BBC News website.
The current leader of the opposition, Conservative Party leader Rishi Sunak, will deliver a speech in response to the budget as soon as Reeves takes his seat.
How much money does the government want to raise?
Labor has repeatedly said it must make tough financial decisions.
In October, government sources told the BBC that tax rises and spending cuts worth £40 billion would be announced in the Budget.
When Labor took power in July, Reeves said it had “inherited the worst circumstances since the Second World War” when it came to public finances – something the Conservatives deny.
Reeves said she faced a £22 billion “black hole”. This gap is due to the rules the government has chosen to follow regarding the amount of money it can borrow over the next five years.
The government has said that reviving the UK economy is its priority.
After a brief recession in late 2023, the UK recorded the fastest growth in the G7 group of the world's richest countries in the first six months of 2024.
However, the Office for National Statistics has since warned that the UK's outlook is one of weaker economic growth.
What could the budget contain?
During the election, Labor promised not to increase taxes on “working people”. He said he would not increase VAT (value added tax), income tax or national insurance (NI).
But there has been much speculation about what the budget might contain:
National Insurance contributions by employers
The Prime Minister and Chancellor have refused to rule out an increase in employer payments under NI. Reeves said Labour's election commitment was about employee payments.
Employers currently pay NI on their workers' earnings at a rate of 13.8%.
Currently, businesses do not pay NI on the pension contributions they make to their staff, but reports suggest this could change.
Businesses argued that increasing NI for employers would make it harder to hire staff and create jobs.
Inheritance taxes
which is currently 40%, is usually paid on the value of a deceased person's assets above a threshold of £325,000.
Changes to a number of exemptions which affect the amount of inheritance tax people have to pay are thought to be being considered.
Capital Gains Tax (CGT)
This tax is levied on profits made from the sale of assets that have appreciated in value, such as second homes or investments.
It is paid by individuals and some business owners. For high earners, the levy currently stands at 24% on gains from the sale of additional assets, or 20% on profits from other assets such as stocks.
There has been speculation that these rates could be increased, but the Prime Minister appeared to reject suggestions of an increase of up to 39%.
Pension taxation
There are several ways the chancellor could raise more money by changing the way private pensions are taxed.
This could include a reduction in the cap on tax-free lump sums from pension funds, a reduction in tax relief for employers who invest in their employees' pensions, or a change to the system of tax relief on pension contributions.
Currently, basic rate taxpayers get a 20% tax break and higher rate taxpayers get 40% or 45%.
The government could introduce a single flat rate of relief which would make the system less generous for high earners, although reports suggest this is now unlikely.
Stamp duty
Land stamp duty is paid if you buy property or land above a certain price in England and Northern Ireland.
In 2022, the rate at which people start paying has increased from £125,000 to £250,000. For first-time buyers it has risen from £300,000 to £450,000.
However, the higher thresholds are only expected to last until March 2025, after which they will return to initial levels. Labor has not committed to an extension.
Non-dom tax status
The term “non-dom” describes a UK resident whose permanent domicile – or domicile – for tax purposes is outside the UK. As a result, they do not pay UK tax on money they earn elsewhere.
In the March budget, the then chancellor, Jeremy Hunt, said the tax status of non-domiciled people would be abolished, although there were some concessions.
Labor has said it wants to toughen up existing plans, although those plans could be reconsidered amid concerns they could raise less money than expected.
Fuel tax
Fuel taxes have not increased in more than a decade. It was frozen between 2012 and 2022, then reduced by 5p in March 2022 when pump prices jumped following Russia's invasion of Ukraine.
However, some motoring groups say the reduction was never passed on to motorists and the RAC says it could be reversed.
What has already been announced?
What happens after the budget speech?
The Treasury, the government department responsible for the economy and public spending, publishes a report alongside the budget speech. It gives more details on the measures announced and their cost.
The Office for Budget Responsibility (OBR), which monitors public spending, also produces an independent assessment of the health of the UK economy.
MEPs will spend several days debating these projects.
They are then asked to approve the proposals and the government presents a finance bill to transform the budget announcements into law.
