The 11 June 2025 Spending Review is poised to increase day-to-day spending from £517.5 billion in 2025/26 to £583.9 billion in 2028/29 and investment spending from £131.3 billion in 2025/26 to £151.9 billion in 2029/30.
The Ministry of Defence and the NHS are both slated to have substantial funding increases so this is a positive sign for any business operating in the sector.
R&D, schools, and new housing are also on the menu for investment.
Rachel Reeves claims that the Spending Review is designed to “invest in Britain’s security, in Britain’s health and to grow Britain’s economy so that working people are better off.”
Planned investments are always welcome news, but there is no such thing as a free lunch.
Many are wondering where the money to fund the investment will come from and how this could affect an already fragile economy.
We take a deeper look and try to understand what this could all mean for the future of tax.
The general mood in the country is one of anxiety.
The actual investment itself is popular, as most Britons see the priorities of the Spending review as the correct ones.
However, 67 per cent of people believe that increasing taxes and borrowing will be needed to pay for them.
These are the findings of the latest YouGov poll that wanted to discover the impact of the Spending Review.
Rachel Reeves has not endeared herself as nearly half of Britons see her as a bad Chancellor, and most Britons believe the economy is not doing very well.
These findings are supplemented by research from IPSOS which discovered that eight in ten Britons expect tax rises in the near future.
Strictly speaking, nothing has been made certain yet, but the signs are there.
Reeves has not ruled out raising taxes and the money needs to come from somewhere.
Council Tax seems poised to face an increase as local authorities have been given the power to increase Council Tax by five per cent.
Local authorities will likely capitalise on this power sooner rather than later.
Businesses are also likely to face greater pressure.
The 2025 tax year saw an increase in employer National Insurance Contributions (NICs) which combined with other costs to make this year one of economic uncertainty for many businesses.
Labour pledged to keep Income Tax and employee NICs frozen, and if this remains true, then employers could face further cost increases.
All of this is combined with frustrations from the agriculture sector about Inheritance Tax (IHT).
Despite large protests, a reversal on the IHT measures seems unlikely as Labour is trying to find as much money as it can to pay for the Spending Review.
In any case, the exact nature of tax rises is yet to be decided, and the full picture will not be revealed until later in the year.
Until then, taking steps to be as tax-efficient as possible with savings and investments may be the key to surviving whatever comes your way.
Reeves aimed to quell fears and boost investment, but she has raised a mountain of questions instead.
Our expert team will answer as many of those as we can and help you prepare for the future.
Make sure your finances are ready for future tax increases. Speak to our team today!
