Which UK tax rises do people support?

As the Labour government prepares its first Budget for 30th October 2024, Chancellor Rachel Reeves may well be wondering which UK tax rises people would support.

It’s a sensible question to ask. Labour has already committed to not raising taxes on working people. More specifically, it has said that any UK tax rises will not apply to income tax, national insurance or VAT.

That said, Chancellor Rachel Reeves has identified what she terms a £21.9 billion ‘black hole’ in the public finances. This means the forecast departmental overspend will be that amount over the expenditure limit set by the Treasury at the Spring Budget 2024.

The Chancellor announced some immediate measures, such as scrapping Winter Fuel Payments for many pensioners and ditching adult social care charging reforms. However, she must be considering which UK tax rises people are more likely to support. Certainly, the less opposition there is to a tax rise, the less politically sensitive it will be.

YouGov survey on UK tax rises

Recently, polling company YouGov conducted a survey to find out which UK tax rises people would support.

While 58% of those polled agreed spending cuts are necessary, only 15% of people think now is the right time to introduce UK tax rises. 41% of people think taxes should remain the same, while 29% believe taxes should go down. Even among those who voted for the current government, only 24% support general UK tax rises.

As often with such polls, though, the devil is in the detail. When YouGov drilled down into support for raising or cutting specific taxes, a more nuanced picture emerged.

Which UK tax rises do people support?

YouGov found there are only two tax rises most people would support. These are rises in corporation tax (56%) and the top (additional) rate of income tax (58%). In addition, slightly more people (41%) would support a rise in capital gains tax than those who would oppose it (35%).

Which tax hikes do people oppose?

At the other end of the scale, there are some UK tax rises that a majority of people oppose. The least popular rise would be to council tax (60% strongly oppose), although this is set locally. That said, it’s possible the Chancellor could give local authorities the power to raise council by a larger percentage than is currently allowed.

A rise in VAT would also be unpopular, with 51% of people strongly opposed and 29% somewhat opposed. It would also be a bad idea for the Chancellor to backtrack and raise the basic rate of income tax. 49% are strongly opposed, with 25% somewhat opposed. Interestingly, a rise in the higher rate of income tax (i.e. the middle band) would be strongly opposed by 29% and somewhat opposed by 20%.

One interesting set of figures applies to inheritance tax (IHT). There has been much speculation that Rachel Reeves is actively considering IHT tax rises. If so, she may want to tread cautiously. 38% are strongly opposed to a rise, while 22% are somewhat opposed. Only 9% strongly support a rise, with a further 24% somewhat supporting it.

How to square the circle

UK tax rises are rarely popular. The challenge facing the chancellor is to make any rises as palatable as possible to voters. While it’s no surprise that Labour voters tend to support UK tax rises more than others, there are limits to their tolerance. Yes, 75% support a rise in the top rate of income tax and 73% a rise in corporation tax, but only 12% would support an increase in VAT, 14% an increase in council tax and – perhaps surprisingly – only 37% a rise in inheritance tax.

The other thing the chancellor needs to take into account is the fact that people are more likely to support UK tax rises for taxes they don’t actually pay. Over the last year, 91% of people haven’t paid corporation tax, 88% haven’t paid CGT and 87% haven’t paid the additional rate of income tax. While 94% haven’t paid inheritance tax in the last year, it’s not an annual tax. 40% believe IHT is a tax that applies to most people, with 46% thinking it’s more of a tax for rich people.

What tax rises can we expect?

Predicting what tax rises we can expect is a bit like staring into a crystal ball. It’s impossible to find definitive answers. One thing’s for sure, and that’s that the easy pickings seem to corporation tax, CGT and the top band of income tax. Beyond these, any tax rises will be more tricky politically – the more people pay a specific tax, the less support the chancellor will get.

We’ll report on any news about UK tax rises as we learn more. But in the meantime, you may want to talk to one of our specialists about tax planning. They’ll be able to advise you on legitimate ways of saving tax under the current rules.