Countdown to the budget: what may be in store for you

With the chancellor’s autumn budget just a month away, rumours are swirling about what changes may be announced by chancellor Rachel Reeves on 26 November.

Benefit cuts

Benefits are one area that could be targeted.

Speaking on Channel 4 News, Reeves said:

“We can’t leave welfare untouched. We can’t get to the end of this parliamentary session and I’ve basically done nothing … We have to do reform in the right way and take people with us.”

Cuts to the Motability scheme

One initiative reportedly under review is Motability - the scheme that allows people with disabilities to lease a car using part of their benefits.

The government is said to be keen to save £1bn by reducing VAT and insurance premium tax exemptions. It may also be considering removing luxury car brands from the list of available vehicles.

Disability charities, including Scope, have strongly criticised the idea, warning it could “heap extra costs on to disabled people all over Britain”.

Motability currently supports around 815,000 people.

Universal credit health top-up age limit

A consultation announced in the government’s Pathways to Work paper suggests raising the minimum age for claiming the health-related element of universal credit to 22.

That means people aged 18–21 with a health condition or disability could lose access to this extra payment - around 110,000 young people currently receive it.

The government says the savings would be reinvested in training and job support for young people, but charities have warned that removing support too soon could push vulnerable young people into hardship.

Personal independence payment

The government has launched a review of personal independence payment (PIP), led by the MP Stephen Timms.

Although it says the review’s purpose isn’t to deliver cuts, Timms has confirmed the system will need to “operate within current spending projections”. With an estimated £30bn black hole to fill, this could potentially mean scaling back support.

However, as the review isn’t due to report back until autumn 2026, it’s unlikely PIP will be targeted in next month’s budget.

Tax changes

In its manifesto, the Labour party promised not to raise taxes for working people. Will it be able to stick to that pledge given the £30bn deficit?

National insurance and income tax

The think tank Resolution Foundation - which has close links to the government - has proposed a major shake-up of how people are taxed.

It’s suggested Reeves cut national insurance by 2p and add the same amount to income tax. This would leave most working people no better or worse off, but would raise an estimated £6bn from groups who don’t pay employee national insurance, including pensioners, landlords and the self-employed.

If adopted, around 8.7 million pensioners and 4.3 million self-employed workers could see higher tax bills.

VAT

Another area that could be targeted is VAT. Although the main rate is 20%, many essentials - like food, children’s clothes and home energy - benefit from reduced (5%) or zero rates.

Some experts believe the government could cut back these reduced or zero rates to raise funds and simplify the tax system.

However, scrapping VAT relief on essentials would hit low-income households hardest. While big changes are seen as unlikely, Reeves could still target certain categories e.g. unhealthy food like cakes.

Even small changes could nudge up prices on everyday items that have already soared over recent years.

Watch this space

Keen to find out which, if any, of these measures come to pass? We’ll be following the budget closely to help you understand what’s changing and what the announcements mean for your wages, benefits and bills.