'Those with broadest shoulders should pay fair share of tax', says Rachel Reeves

The Chancellor said she wants to “get the balance right” and not people wealthy people off coming to the UK ahead of the Budget next month.

Ms Reeves was speaking in Washington DC at the International Monetary Fund meeting.

She said: “I want Britain to be a great place for talent, for entrepreneurs, for successful individuals to come, and that requires getting the balance right.

“But I do think those with the broadest shoulders should pay their fair share of tax and I think you can see that from my actions last year at the budget.”

She added: “I want the UK to remain an attractive place, but we’ve got to get the balance right and I do think that if Britain is your home you should pay your taxes here.”

When asked how she could raise additional revenue, the Chancellor said: “We’re not going to be introducing a wealth tax. We already have a number of taxes in the UK that do tax wealth and do tax wealthy people, and some of those we increased in the budget last year.”

When asked to confirm who would be affected, she said: “Wealth is obviously different from income. So wealth is not about your your annual salary.”

Ms Reeves said she hoped wealthy people would still make the UK their home: “This week we’ve doubled the visas available for global talent. We want Britain to be a place where people come and build their teams and build their businesses.

She also said the UK Government would bring in measures to target rising prices.

It comes after the IMF warned that the UK will have the worst inflation in the G7 this year and in 2026.

Ms Reeves said: “Inflation is still too high. Some of that is due to food prices, energy prices. We’ve seen yesterday the [markets watchdog] review on vet prices. We do want to bear down on some of the costs that people face,” she said, adding that she was preparing to announce “a range of policies to do that”.

She also played down the chances of banks being taxed more heavily: “We want to make sure that Britain is a great place to do business and to bring in business. Just in the last week or two, JP Morgan have made a £3m investment in Bournemouth for example.

“Financial services is one of our big success stories in the UK and we want to make sure that we have a competitive environment. But also we want to make sure that everyone pays their fair share of taxes. We’ve got to get the balance right there.”

Ms Reeves’ second autumn budget will take place on November 26.

Last year she announced a slew of tax rises - including raising employers’ national insurance.

But she did not raise income tax, VAT or employees’ national insurance - as Labour had promised in its manifesto.

It is unclear how she will raise tax on wealthier people.

Although Labour pledged not to increase income tax before the election, the Government could extend the current freeze on income tax thresholds beyond 2028.

This would mean that as salaries rise more people reach a level at which they start paying tax, or they start paying higher rates.

When asked about freezing income tax thresholds in September, Ms Reeves did not rule it out.

It has also been suggested that the government may reform property taxes.

This could mean replacing stamp duty, which is devolved in Scotland, with a property tax.

There could also be an increase in taxes for landlords or changes to council tax. Both of these would be unlikely to apply in Scotland.

They could also introduce capital gains tax for people selling their main residence, or could increase the levy for the sale of second homes.

Increased taxes on businesses has also been touted as a possibility.

These could include higher levies on online gaming companies’ and gambling firms’ profits.

The Chancellor said in September that "there is a case for gambling firms paying more.”

Corporation tax is another levy which the Chancellor could choose to raise. The current rate is 25 per cent for all firms with profits of more than £50,000. But this is unlikely as it was recently increased from 19 per cent.

Ms Reeves will need to find a way to meet her goal of balancing day-to-day spending with tax revenues while maintaining “headroom” of around £10 billion.

The Institute for Fiscal Studies (IFS) said it expected the Chancellor would need to find at least £22 billion next month, thanks to rising borrowing costs, weaker growth forecasts and spending commitments made since the spring.

That figure would restore the £10 billion of headroom Ms Reeves previously left herself against her self-imposed debt rules, although it does not include the cost of widely expected announcements on abolishing the two-child benefit cap and maintaining the freeze on fuel duty.

But the IFS said there was a “strong case” for the Chancellor to go further, arguing that a £10 billion buffer was not enough to ensure stability and would leave her “limping from one forecast to the next”.

Meanwhile, the National Institute of Economic and Social Research (Niesr) has suggested Ms Reeves will need to find around £50 billion a year by 2029-39.

Scottish firms had urged the Chancellor to show “restraint” when it comes to tax rises.