Britain’s high earners would see thousands added to their tax bills if Chancellor Rachel Reeves opts to extend the freeze on income tax thresholds in the Budget. Analysis from wealth manager Rathbones shows that those earning over £100,000 would face an extra £7,000 in income tax if the freeze is maintained. For those earning £80,000, the additional tax burden would be £5,635, while those in the £50,000 bracket would pay £4,632 more. Extending the freeze on income tax thresholds – which is currently set to expire in 2028 – would also pull 1.4m people into the highest rate bracket, which captures those earning over £125,140 a year. Suggesting that the freeze on income tax thresholds “could be dragged out further” as the Chancellor looks to “plug the nation’s financial black hole,” Rathbones’ Ade Babatunde said: “It’s taxation by stealth: the rates stay the same, but a bigger slice of your pay disappears into the taxman’s coffers.”

Experts say Chancellor Rachel Reeves will have to consider tax increases in the upcoming Budget, despite a drop in Government borrowing in July. With economists warning that public finances remain weak, Elliott Jordan-Doak from Pantheon Macroeconomics said: “We think the Chancellor will need to resort to sin and stealth tax hikes, duty increases, and a pensions tax raid in order to meet her fiscal rules if she wants to meet her pledge of keeping headline tax rates unchanged.” Matt Swannell, chief economic advisor to the EY Item Club, said: “Ultimately, it will be the Office for Budget Responsibility’s projection for borrowing over the coming years, not solely this year, that will determine whether the Government meets its fiscal target, and doing so will very likely require tax rises at the autumn Budget.”

Inheritance tax (IHT) receipts hit a record high of £3.1bn between April and July, having jumped £200m year-on-year. The tax take from IHT is projected to reach £9bn by the end of the tax year, according to HMRC. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Inheritance tax receipts continue their unrelenting rise. We are only part of the way through the year, but it already looks likely that we are in for another record year for this most unpopular of taxes.” The nil-rate band remains frozen until 2030, pushing more families into the tax net as property prices rise, and changes to IHT rules are expected to further increase liabilities for families. Elsewhere, PAYE income tax and National Insurance contributions reached £160.6bn between April and July, with this up £13.5bn year-on-year.

While Chancellor Rachel Reeves is reportedly considering charging capital gains tax on the sale of homes worth more than £1.5m, in a bid to plug a hole in public finances Andrew Wishart, an economist at Berenberg Bank, has warned that the plan ” might not generate any additional revenues at all.” He said the extra charge would “incentivise people to not sell, to try and hold to the next election, to see if it changes.” Martin Beck, the chief economist at WPI Strategy, said the change “would exacerbate existing headwinds from the non-dom changes and the capital gains tax rise.” Lucy Spencer, from wealth manager Evelyn Partners, noted that it was unclear how such a levy would interact with inheritance tax.

The private sector has seen job cuts for 11 consecutive months, with this largely attributed to the £25bn increase in employer National Insurance. A report by S&P Global shows that employment numbers fell sharply in August, with businesses struggling under rising hiring costs. Chris Williamson, chief business economist at S&P Global, said: “Payroll numbers… continue to be cut at an aggressive rate by historical standards.” The Recruitment and Employment Confederation noted a 9.2% drop in new job postings in July.

Experts warn that raising the state pension age to 70 could disproportionately affect those in physically demanding jobs, flagging that workers such as carers, warehouse staff, and miners may struggle to continue working into their late sixties. Dr Suzy Morrissey from the Pensions Policy Institute is reviewing the retirement age at the request of Work and Pensions Secretary Liz Kendall. Sir Steve Webb, a former Pensions Minister, said: “Not everyone finds it equally easy to work up to that age.”

Private sector output has grown at its fastest pace since August 2024, according to the UK Composite PMI from S&P Global. The index hit 53.0 in August, up from 51.5 in July on a scale where a figure over 50 indicates expansion. The growth was driven by a rebound in the services sector. Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data shows that economic growth “has continued to accelerate over the summer after a sluggish spring.” However, he warned that confidence among businesses remained “uneven and fragile.”

According to a new report from eBay UK, 78% of online SMEs anticipate growth in the next year, with a third saying they feel “very confident.” The report highlights a shift towards digital-first businesses, with many launching with minimal capital. The poll shows that 44% started with less than £1,000 and 3% launched with no capital at all. AI is seen as a vital tool, with 43% of SMEs excited about its potential. Eve Williams, general manager of eBay UK, said entrepreneurial businesses are “ambitious and adaptable.”

Office for National Statistics (ONS) data shows that Government borrowing – the difference between public spending and income – stood at £1.1bn in July. This was down on the £2.3bn recorded last July and below the Office for Budget Responsibility’s £2.6bn forecast. The total deficit has risen to £60bn since April, with this £6.7bn more than in the same four-month period of 2024. Tax receipts rose by £6.1bn to £77.6bn on the back of higher income tax and National Insurance revenues, while total public spending rose to £92.1bn last month. Chief Secretary to the Treasury Darren Jones said officials are “driving down government borrowing,” as “far too much taxpayer money is spent on interest payments for the longstanding national debt.”

Speciality Steels UK (SSUK), the UK’s third-largest steelworks, has been placed under Government control after the High Court granted a compulsory winding up order sought by creditors. The company, which is part of Liberty Steel, will be placed in the hands of the Official Receiver and managers from consultancy firm Teneo. The Government will cover the ongoing wages and costs of the plant while a buyer is sought. Liberty Steel’s chief transformation officer, Jeffrey Kabel, said the decision to put the firm into compulsory liquidation was “irrational,” adding: “We are by far the best company to run this business.” Lawyers for Sanjeev Gupta, CEO and chairman of Liberty Steel parent company GFG Alliance, had applied for an adjournment to allow time to place the company in a pre-pack administration and then immediately buy it out.