Brits are on red alert for more tax rises amid fears most of Rachel Reeves’s monster Budget raid has already been wiped out.
The Chancellor justified her latest assault on the country’s wallets in November by arguing that she needed to build up so-called ‘headroom’ in her plans.
That is the wriggle room for hitting her main fiscal target, of revenues covering day-to-day spending within a three-year period.
However, analysis by Bloomberg suggests two-thirds of the £22billion margin might already have disappeared, due to a combination of U-turns, lower GDP growth prospects and a defence funding shortfall.
Since the Budget the government has moved to appease furious family farmers by easing inheritance tax rules, at an estimated cost of £130million a year.
Chancellor Rachel Reeves justified her latest assault on the country’s wallets in November by arguing that she needed to build up so-called ‘headroom’ in her plans
Ms Reeves is also promising to cushion devastating business rate hikes for pubs, which insiders have been suggesting could have a price tag of £300million.
Labour MPs are clamouring for the reliefs to be extended to the whole hospitality sector, something that could dramatically increase the cost.
Meanwhile, a sharp reduction in net immigration could give the Treasury a huge headache as higher numbers boost GDP, even if wealth is not increasing per head.
If long-term inflows are 100,000 a year lower than the OBR watchdog expected that could trim £9billion off tax receipts in 2029-30, according to Bloomberg.
Questions have also been raised about defence funding, with the government’s investment plan seemingly delayed while ministers decide how to handle a £28billion shortfall over the next four years.
Ms Reeves has moved to prevent the OBR from officially declaring whether she is meeting her fiscal rules in March – although it will give an assessment and update forecasts.
However, the renewed pressure on the finances will raise alarm about taxes rising again in the Autumn.
Having notoriously broken her 2024 promise that the burden would not increase further from its record high, Ms Reeves said after the last Budget: ‘I reserve the right to be able to take action at any point.
‘But I believe the headroom that we have and the changes we have made means I won’t need to do that in the spring.
‘Of course I reserve the right at any time to take action.’
Official figures suggest Ms Reeves has the dubious distinction of delivering two of the 10 biggest tax-raising Budgets on record.
The Chancellor’s November 2025 package ranks seventh in an historical database compiled by the Treasury’s OBR watchdog.
Meanwhile, her debut Budget in 2024 was rated as the second largest in figures going back nearly six decades.
