Rachel Reeves 'plotting new £1.5 billion tax rise' in latest Budget hammer blow

Brits are bracing for the tax increases that are expected to be announced as part of Rachel Reeves' autumn budget. As well as an increase in income tax, the Chancellor is expected to raise the rate of dividend tax, which is a tax that people pay on earnings received from shares. The move is reportedly being made to raise £1.5 billion in a bid to help fill the £30 billion black hole in Britain's public finances.

Shadow Chancellor, Sir Mel Stride, has slammed the move. He told The Telegraph: "If these reports are true, it would be another hammer blow for investment, saving and wealth creation in this country. Reeves can point the finger all she likes but this Budget black hole is of her own making - and now investors, pensioners and working families are paying the price for her failure to get a grip on spending."

This comes despite the Chancellor's previous reported plans to lower the Cash ISA limit in hopes of encouraging more people to invest their money. It was previously reported that Reeves hoped to lower the Cash ISA limit from £20,000 to as low as £12,000.

As reported by the Telegraph, Reeves could opt for a "middle ground" by raising the dividend tax rate by around 4%, which would raise approximately £1.5bn.

Reeves is expected to make several tax increases in the Autumn budget, including an increase in income tax, which goes against Labour's election manifesto. Reeves made a pre-budget speech last week, which explained the reasons behind the changes that will be announced on November 26.

Financial experts at AJ Bell say that rumoured income tax increases could cost an extra £377 a year for middle earners taking home £50,270. Savers and even pensioners could be paying between £24 and £377 more per year to HMRC for earnings ranging from £15,000 to £50,270.

AJ Bell's Director of Personal Finance Laura Suter said: "While [Rachel Reeves] batted away questions on what taxes would change and whether Labour would break their manifesto commitment to not raise VAT, income tax and National Insurance, that looks increasingly likely.

"But if she increased the basic rate of income tax, she'd be the first Chancellor in 50 years to do so."

She added: "It would cost taxpayers up to £377 a year in extra tax, with anyone earning £50,270 or more facing the maximum hit. For someone on £15,000 a year the extra tax hit would be just £24 while someone on £35,000 would pay £224 a year more in tax. The move would impact anyone with a taxable income, not just those who are employed, as you pay income tax on earnings, pension income, rental income and interest on savings."