Treasury ‘already drawing up tax rises for the Autumn’ as grim poll shows just a fifth of Brits say Rachel Reeves had priorities right in Spending Review

By JAMES TAPSFIELD, POLITICAL EDITOR FOR MAILONLINE

Published: 15:21 BST, 15 June 2025 | Updated: 16:43 BST, 15 June 2025

The Treasury is already said to be drawing up tax rise options for the Autumn as economists warn Rachel Reeves’ plans no longer add up.

Dividends and bank profits are among the areas being mooted for drumming up revenue to balance the books.

The Chancellor declined to rule out tax rises again this morning, amid fears that the Israel-Iran conflict could deal another hammer blow to the prospects for growth.

Meanwhile, a poll has suggested that last week’s Spending Review did not go down well with Brits. Just 19 per cent thought the package had the right priorities – with 36 per cent saying it did not.

More than half expect the economy to get worse over the next year, the Opinium research found.

Ms Reeves insists her spending plans for the next three years are ‘fully’ funded. But critics have claimed the stalling economy, together with pressures on defence and a Labour revolt on benefits mean she is writing cheques with ‘fantasy’ money.

The issues could crystalise at the Budget in the Autumn, when many believe the independent OBR will downgrade growth forecasts. GDP shrank by 0.3 per cent in April, although it has grown over the past quarter.

Rachel Reeves declined to rule out tax rises again this morning, amid fears that the Israel-Iran conflict could deal another hammer blow to the prospects for growth

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Ms Reeves insists her spending plans for the next three years are ‘fully’ funded, despite criticism from think-tanks

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The IFS think-tank has warned that tax rises look ‘almost inevitable’, ridiculing the government’s claim to have identified billions of pounds in ‘efficiencies’ during a ‘zero-based’ overhaul of costs.

According to the Sunday Times, a list of potential tax increases drawn up in the Treasury includes raising the bank surcharge.

That is a levy on profits on top of the 25 per cent corporation tax rate. It was cut from 8 per cent to 3 per cent under the Tories, with suggestions it could return to 5 or 6 per cent.

Another apparent option is increasing tax on dividends, often taken by company directors instead of wages.

Currently the highest rate stands at 39 per cent – lower than the 45 per cent top rate of income tax. 

Removing a tax-free £500 dividend allowance would bring in hundreds of millions of pounds for the Treasury, but could punish small investors.

Challenged on the BBC’s Sunday with Laura Kuenssberg that ‘lots of experts’ were already saying she would need to put taxes up, Ms Reeves said: ‘Well we’re a strong economy with strong foundations and we have weathered other shocks… 

‘We are still the only country to have secured a deal with the United States, and in addition we’ve got trade deals with India and the EU, so we are working hard as a government to strengthen our economy, to grow our economy in a way that creates good jobs here in Britain, paying decent wages, to put more money in peoples’ pockets.’

Options are always drawn up within the Treasury ahead of fiscal events, and not necessarily implemented.

GDP shrank by 0.3 per cent in April, although it has grown over the past quarter 

Shadow chancellor Mel Stride said: ‘Rachel Reeves today refused to rule out coming back with more tax rises later this year as the impact of her decisions on the economy worsens.

‘Meanwhile today the Sunday Times has revealed Rachel Reeves’ team have drawn up a secret tax rising dossier outlining how to hit the British people with higher taxes. This is despite the Chancellor promising not to come back for more taxes after spooking markets last year.

‘The truth is Rachel Reeves is more than likely to put her hands in the pockets of British taxpayers and business to pay for her mistakes.’

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Treasury ‘already drawing up tax rises for the Autumn’ as grim poll shows just a fifth of Brits say Rachel Reeves had priorities right in Spending Review

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