Tax rises flagged by Chancellor Rachel Reeves — an article for Parachute Law
Key Takeaways:
- Tax rises are firmly back on the table — Chancellor Rachel Reeves refused to rule out increases ahead of the 26 November Budget, signalling a potential break from Labour’s election pledges.
- Economic pressures are driving the shift — Slower growth, higher borrowing costs and a widening fiscal gap have forced the Treasury to consider “tough choices” to balance the books.
- Legal and financial planning is now time-sensitive — Solicitors and advisers should prepare clients for possible changes to income tax, VAT or reliefs affecting wills, property, and estate planning.
In a key speech this week, Chancellor Rachel Reeves refused to rule out tax rises ahead of the upcoming Autumn Budget, signalling a potential break with her party’s manifesto commitments and raising major questions — which are especially relevant for legal professionals advising on estate planning, co-ownership of assets, powers of attorney and other property or wealth matters.
1. What did the speech say?
On 4 November 2025, Reeves delivered a pre-Budget address which deliberately set the stage for harder fiscal choices. She told journalists that “the world has thrown even more challenges our way” and insisted that she must “deal with the world as I find it, not the world as I might wish it to be”.
Although she did not name specific tax measures, she made clear that she would not shy away from raising taxation if deemed necessary for the public finances. The speech emphasised that the economy is weaker than anticipated, growth is slow, borrowing costs remain elevated and productivity has disappointed.
Importantly for legal advisors, it was the first time Reeves has publicly suggested she might break or reinterpret the ruling-party manifesto pledge not to raise three major taxes: income tax, VAT or National Insurance Contributions (NICs).
She also urged the public and private sectors to “each do our bit” for Britain’s future and warned against simplistic or populist answers to the fiscal challenge.
2. Why this matters for property, wills and powers of attorney
As a legal practitioner writing for Parachute Law, the implications of a possible tax rise are significant across multiple areas:
2.1 Estate-planning and inheritance tax
If tax burdens increase, clients may be more motivated to revisit inheritance tax (IHT) planning, trusts and lifetime transfers. Any tax rises could make earlier planning more urgent — changes to thresholds, reliefs or rates could impact agricultural or business property reliefs, for example. Given Reeves’ earlier budget announcements (in October 2024) included changes to rural estates and IHT thresholds, the signal now is that the tax landscape may shift again.
Legal practitioners should advise clients to:
- Review existing wills and trusts in light of potential tax-burdens.
- Consider accelerated gifting or lifetime transfers where appropriate (with full professional risk/benefit discussion).
- Ensure powers of attorney reflect the possibility of earlier access to assets or changes in tax treatment.
- Monitor any forthcoming Budget announcements (estimated 26 November) which may introduce new relief changes, threshold freezes or relief removals.
2.2 Co-ownership, joint ownership and family wealth
In a context of rising tax risk, clients holding property or businesses in joint names or via family arrangements may wish to revisit structures to optimise for tax efficiency. For instance:
- Joint ownership agreements may need updating to reflect new tax burdens.
- Powers of attorney may require review to ensure decision-making rights remain fit for purpose in uncertain tax times.
- Business owners may need to revisit succession planning with an eye to possible tax increases on both businesses and personal income.
2.3 Powers of attorney and financial management
If taxes rise, clients may face higher cash-flow demands to meet tax liabilities (for example through increased NICs, income tax or corporate tax). That has implications for attorneys acting under lasting or enduring powers of attorney:
- Ensure attorneys understand potential tax-liability obligations and review whether the donor’s asset base remains sufficient for the anticipated burden.
- Attorneys should monitor any changes in tax rules which could affect the donor’s estate, business stake or cash-flow and adjust decisions accordingly (e.g., drawing on investments, maintaining liquidity, protecting capital).
- Highlight the importance of maintaining proper records and tax-compliance in anticipation of government scrutiny in a tighter fiscal environment.
3. What is the backdrop and what triggered this shift?
Several contextual factors underpin Reeve’s speech and signal why tax rises are now squarely on the table:
- Growth in the UK remains weak, with pessimism about productivity gains and high borrowing costs putting pressure on the public finances. Reeves herself referenced this “mess” inherited from years of economic mis-management.
- The fiscal gap is widening. Analysts estimate the government may need to raise tens of billions of pounds to rebuild buffers and meet fiscal rules.
- The government has prioritised avoiding a return to austerity — therefore tax increases become one of the main levers. Reeves stated she was not “going to walk away because the situation is difficult”.
- The speech is timed ahead of the planned Budget on 26 November. It appears designed to soften the ground politically, signalling that tough choices will be needed.
4. What exactly might happen in the November Budget?
While nothing is confirmed, we can outline plausible scenarios — and from a legal-planning standpoint consider the possible impacts:
Potential Tax Measure | Likely Impact |
Income tax rate rises or reduced allowances/thresholds | Higher tax on working income may reduce after-tax earnings, affecting cash-flow for clients and attorneys. |
Freeze or removal of tax reliefs | Reliefs currently taken for granted (e.g., IHT relief for business/agricultural property) may change, prompting urgency in planning. |
VAT increase or base broadening | If VAT goes up or base widens, consumer and business costs rise — this may affect property maintenance, leasehold costs, service charges. |
National Insurance / social security changes | For business owners or self-employed, changes here may affect business structuring, profit extraction strategies. |
Business/corporate tax rises or increased taxation on wealth | That may indirectly affect asset values, business longevity, co-ownership structures, exit planning. |
Legal advisers should warn clients that the window to act may be limited: once the Budget is announced and legislation begins its passage, opportunities for pre-emptive structuring shrink.
5. Strategic legal-planning recommendations for advisers and clients
In light of the above, here are practical pointers for Parachute Law clients and advisers:
- Timing is key: Advise clients to act early. With the Budget looming (26 November), time-sensitive planning (gifts, asset transfers, trust restructuring) deserves immediate review.
- Maintain flexibility: Given uncertainty in what tax measures will land, clients should avoid “all-in” strategies that hinge on one outcome (e.g., only one relief being changed). Consider multiple scenarios.
- Liquidity and cash-flow review: Given potential higher tax burden, clients (especially those with property, businesses or co-ownership interests) should stress-test asset-liability positions, ensuring that they have access to funds to cover increased tax bills without forced disposals.
- Update legal documents: Wills, trust deeds, joint ownership contracts and lasting powers of attorney should be reviewed to ensure they remain appropriate in the event of heavier tax burdens, business value reductions or earlier transfers.
- Client communication: Many clients will feel uneasy about what appears to be a possible manifesto break. Advisers should be ready to explain clearly that no one can know precisely what measures will be taken but that prudent planning mitigates risk.
- Compliance and record-keeping: In a tougher fiscal environment, HMRC or HM Treasury may scrutinise arrangements more closely. Clients should ensure good governance, proper valuations, transparent trust structures and client/advisor advice letters.
- Monitor the legislative process: After the Budget, proposed tax measures will go through Parliamentary stages. Advisers should track the progress, amendments and implementation timelines so clients understand when planning opportunities expire or crystallise.
6. Risk and reputational dimension
There is also a reputational and political risk dimension to this shift. The fact that Chancellor Reeves is signalling possible tax-rises despite earlier pledges may affect client perceptions and business confidence. For advisers this means:
- Being transparent with clients about the political risk and the possibility of budget surprises.
- Advising businesses, family enterprises and property owners about the “horizon risk” of legislation changing quickly.
- Recognising that tax-planning strategies seen as aggressive or relying on reliefs under threat might draw increased regulatory attention.
7. What to watch between now and the Budget
For legal and financial advisers, the next few weeks are crucial:
- Monitor any leaks, HM Treasury consultations or documents ahead of 26 November.
- Watch the forecast from the Office for Budget Responsibility (OBR) which may revise productivity/growth assumptions and thereby widen the fiscal gap.
- Stay alert to announcements on manifesto-pledge adjustments, especially relating to income tax, VAT or NICs.
- Check for early signals on drafting of legislation, effective dates and grandfathering provisions for reliefs.
- Assess how businesses and sectors (e.g., property, professional services, high-net-worth individuals) are responding — stress tests, restructuring, delaying decisions.
8. Legal guidance call-to-action
Given this backdrop, your clients should consider the following as part of proactive legal advice:
- Immediate review meeting: Recommend a meeting with each relevant client (high-net-worth individuals, couples with co-owned property, business owners, trustees) to review existing documentation (wills, trusts, POAs) in light of possible tax changes.
- Update client memos: Prepare tailored client memos explaining the nature of the risk (tax rises, relief changes) and the planning options available (accelerated gifting, trust review, business succession planning, property co-ownership structuring).
- Policy-watch subscription: Ensure you and your clients are subscribed to policy-watch services (Parachute Law’s newsletter?), HMRC updates, Treasury announcements so any legislative change is captured quickly.
- Document decisions and advice: Keep detailed advice letters, records of decisions (and non-decisions) around tax-planning in case of future HMRC queries — in a changing tax-environment, this is increasingly important.
- Communicate cost vs benefit clearly: Some clients may be reluctant to restructure now because they hope reliefs will survive. The changed signal from the Chancellor means the “wait and see” option carries higher risk. Clients should understand that the cost of planning may be outweighed by the risk saved.
9. Conclusion
Chancellor Rachel Reeves’ refusal to rule out tax rises in her recent speech marks a pivotal moment in UK fiscal policy. For those practising in the legal fields of wills, trusts, powers of attorney, co-ownership and estate planning, this signals an urgent need for clients to prepare, review and respond. The uncertainty is wide-ranging: Will income tax rise? Will VAT be increased or broadened? Will reliefs be reduced or removed? As always, early advice, flexibility, and strong documentation will serve clients well in a fiscal environment that may shift rapidly.
From the perspective of Parachute Law, this means your communications, advice frameworks and client actions should reflect the heightened risk of tax policy changing — and not just for large estates or business owners. Even modest clients with co-owned assets or family trusts may find themselves needing to act sooner than expected.
Let me know if you’d like a client-facing checklist or template email to clients summarising these risks and advising a review meeting — I can draft both in your preferred style.
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