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Waiting until after the Budget could be too late.
Rachel Reeves’s emergency Downing Street address at 8 a.m. was the strongest indication yet that tax rises are coming. It was carefully choreographed: an early-morning broadcast designed to steady markets while preparing the public for difficult news.
Governments don’t test language by accident. When ministers stop repeating old pledges, they are preparing to move beyond them. Reeves’s decision not to restate Labor’s 2024 manifesto promise not to raise income tax, national insurance or VAT marked a clear shift in tone.
She spoke of “pressures on the public finances” and a weaker-than-expected productivity performance. Those words were chosen to signal limits, not opportunity. The direction of travel is now visible.
The speech achieved its immediate purpose. Markets opened calmly, with gilt yields edging down to about 4.4 per cent as investors took comfort from her insistence that her fiscal rules remain “iron-clad.” But what reassured markets should alert taxpayers.
Official figures show borrowing hit £20.2 billion in September — the highest for that month in five years — and nearly £100 billion over the first half of the fiscal year, far above forecasts. Analysts estimate a £30 billion hole ahead of the November 26 Budget.
Debt interest payments now exceed £110 billion annually. Productivity forecasts have been downgraded again. Growth remains flat. Those numbers leave little room to manoeuvre without raising revenue.
This is why I believe tax increases on capital and wealth are now very likely. Anyone with exposure to UK assets should assume that changes to capital gains tax, dividend allowances, inheritance thresholds and pension reliefs are being considered seriously.
The political language tells its own story. The emphasis on “fairness” and “opportunity” has always been the prelude to structural tax changes. It’s a way to build acceptance before the measures are announced.
Every fiscal squeeze follows a similar path. The Treasury promises prudence, insists reforms are technical, and presents new burdens as modernisation. Yet the effect is the same: more tax, less saving, weaker investment.
The measures most often used in this kind of environment are subtle rather than dramatic. Freezes in inheritance thresholds. Reductions in higher-rate pension relief. Lower dividend allowances. Aligning capital gains with income tax rates. Each can be described as tidying up the system, but together they amount to a significant rise in the overall burden.
With gilt yields still high and borrowing costs eating into the budget, these tools are attractive. Reeves’s fiscal rules — to fund day-to-day spending from tax receipts and reduce debt as a share of GDP by 2029 — all but require new revenue sources.
If the Chancellor chooses this route, the consequences will reach beyond retirees or high earners. Raising effective taxes on savings and investment would suppress household confidence and slow domestic demand. It would also risk deterring the international capital that the UK depends on for growth.
Confidence in the stability of the tax framework is one of Britain’s few remaining competitive strengths. Undermine that, and the cost of attracting investment rises across the board.
At deVere, we’re already seeing clients review portfolios, pensions, and estate plans in anticipation of change. Savers and investors can sense that the window to prepare is narrowing. History shows that once a Budget is delivered, few options remain to adapt before new rules take effect.
This isn’t a time for panic, but it is a time for action. The signals are clear enough for anyone paying attention. The government faces the toughest fiscal environment in a decade, and the temptation to target wealth, savings, and capital gains will be strong.
Reeves’s message this morning was one of fairness and responsibility, but it also hinted at redistribution. Her refusal to rule anything out makes the path ahead obvious: fiscal tightening through higher effective taxation is, in my view, very likely.
When the Chancellor delivers her Budget on November 26, investors may hear the formal confirmation. Those who act now to protect their savings and investments will be the ones best placed to weather what’s coming.
The signals have been sent. The prudent are already responding.
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