Soften the impact of Labour tax rises

CHANCELLOR Rachel Reeves and Prime Minister Sir Keir Starmer look set to target pensions, inheritances and capital gains in the Budget - but they will not stop there.

- Harvey Jones

There are other taxes they could hike on October 30, from fuel duty and employer's national insurance contributions to property levies.

In the final part of our four-part pre-Budget series, we look at the hidden nasties that could be heading our way. We also look at what you can do to soften the impact, although that is not always possible.

FUEL DUTY

Ms Reeves could squeeze even more juice out of motorists by hiking fuel duty and even vehicle excise duty.

Fuel duty is a huge earner for the Treasury, worth almost £25billion a year, more than capital gains tax and inheritance tax combined.

In March 2022, the Conservatives introduced a temporary 5p fuel duty cut to help with the cost-of-living crisis. This was extended for a second year and is due to run until March.

Jayne Harrold, tax partner at Evelyn Partners, said Ms Reeves may not extend the temporary cut, claiming the cost-of-living crisis is over, then slap on another 5p. That would increase fuel duty by 10p, with VAT on top.

"A driver filling a 55-litre tank would pay an extra £6.60. This will add up over the year," Ms Harrold said.

She says that could raise £5.5billion a year, going some way to plugging that £22billion "black hole".

Auto Express editor Paul Barker also fears a raid on our 35 million motorists but said: "Any hike in motoring Target...drivers tax would break Labour's pre-election promise not to raise taxes on working people."

He added: "This is not the moment to tighten the screws on drivers still struggling to make ends meet."

INSURANCE PREMIUM TAX

Chancellors love stealth taxes. They see it as a way of raising extra money, without annoying voters.

Insurance premium tax is a classic example. When introduced in 1994 the tax was just 2.4%. Today it is 12% on household, motor, pet and medical insurance.