Seven Britons share their hopes and fears about the chancellor Rachel Reeves’s first budget, and weigh up the needs of pensioners, those unable to work and small businesses, with tax incentives for professionals and the government’s budgeting needs. ‘I worry the wealthy won’t be properly taxed yet again’ “I’m worried that the government will water down their plans to properly tax the wealthy,” said 68-year-old Martin Coult from London, who is retired. “Private education should be taxed on top of the VAT, and capital gains tax [CGT] needs to be at least equivalent to income tax. “I fear Reeves and Starmer will cave in and lack the resources for meaningful investment in the public realm.” Coult, whose sole income is the state pension, has just lost his £500 winter fuel allowance and has received a £300 income tax bill as the frozen tax thresholds have dragged his state pension into taxable income territory. “I’m down £800 already,” he said. “That’s a small price to pay if we get the improvements in public services we desperately need, but I would like to see the wealthy pay a lot more than me.” ‘Cliff-edge pension rule changes would be dreadfully unfair’ Deejay, 59, a public servant from East Anglia, had been planning to retire in February next year and take out a tax-free £240,000 lump sum from his pension pot to pay for a house by the sea. Now, he worries that Reeves’s budget will throw a spanner in the works. “It’s a retirement dream,” he said. “I’ve paid a non-refundable £10,000 deposit plus some upfront legal fees, and this house is being built right now. If the government pulls the rug from under our feet and lowers the tax-free lump sum, I’ll have no choice but to withdraw, will lose my deposit and will probably have to carry on working.” Deejay feels sudden cliff-edge changes to pension savings rules are “dreadfully unfair” and disproportionately affect “ordinary folk” who have carefully planned their retirement finances. “I don’t consider myself particularly wealthy, but I have had a good career and I have made significant sacrifices in the last 20 years by electing to pay more into my pension so as to draw more benefit when I retire. I have missed out on things to enable this, such as holidays. “Keir Starmer said before the election that the 25% tax-free lump sum will be safe under Labour. Now, they could really be wrecking our plans, and the lives of many others. Many were planning to pay off their mortgage with their lump sum. My wife and I are so stressed about it.” ‘I fear the long-term sick will be penalised’ Simon Forder, 53, a father of two primary school-age children from Moray, Scotland, has long Covid and has been deemed unfit to work since June 2021. “I’m deeply concerned about headlines suggesting the budget could disproportionately target low-income and chronically ill people,” he said. “Comments by Starmer and Reeves about ‘a culture of reliance’ and wanting to encourage the long-term sick back to work are a demeaning narrative for a Labour government. “The removal of benefits and the continuing obsession with growth and small-state government helps nobody but the wealthy. The priority has to be resolving the cost of living crisis for the people at the bottom end.” Forder welcomed “millionaire pensioners” losing their winter fuel allowance, and believes the government should focus on corporate tax avoidance to raise revenue. “Root and branch economic reform of the whole country, that’s what’s needed,” he added. ‘We cannot find places in decent state schools’ Cathleen, 40, a marketing professional from London, is very concerned about the government’s likely scrapping of VAT relief for private school fees. “My husband and I both work incredibly hard, often long hours. We earn good salaries but have little headroom for changes as our mortgage nearly doubled in August and we send our child to private school,” she said. “The main reason for this is the lack of good state options in the area. Affording this is already a huge stretch and at the maximum of what we can afford. Our school has said they will be adding VAT from January if Labour go ahead with their plans. This will add hundreds of pounds per month to the bill which we can’t afford.” Cathleen said she felt the state sector was unable to accommodate extra children needing to switch from private to state schools. “There isn’t a state school that we would get into that I would send my child to,” she said. “When I contacted my local authority to ask about options, they didn’t even reply, and I know from others that all the decent schools are well oversubscribed.” ‘Hiked employer NICs would be another squeeze for battered businesses’ Stuart McCormick, from Chester, who owns a business providing inventory condition reports for rental property deposit disputes, is worried about the prospect of employer national insurance contributions (NICs) being hiked on Wednesday. “We’re still in post-Covid recovery, like many other businesses. I sold my house two years ago to keep my business afloat. Many are still repaying Covid loans. The minimum wage increases affect companies a lot,” he said. “Higher employer NICs on both pension contributions and wages would be just another squeeze, and we can’t ask our customers to agree to yet another price increase. “We already had a bad year, with customers rejecting inflation-matching price rises. We will find it hard to invest in our business to help it grow with less margin to play with.” McCormick is also confused about the prime minister’s messaging about who are and are not “working people”. “I’m not a millionaire, and voted Labour because I consider myself a working person. I’m deemed to have the broadest shoulders, but the reality is, last year I made about £80,000 before tax. Our income has gone down and down again since Covid. “I don’t mind them taking a bit more money off me, but the economy is in a mess, it needs to recover.” ‘The middle class is being punished’ “Rachel Reeves seems hell-bent on going after the middle class,” said Ben, 49, a father of two from London, who works in a leadership position in a media startup. The family’s household income is about £110,000, and Ben’s most significant concern is a possible increase in CGT. “Many have worked hard to be less of a burden on the state by investing sensibly and making capital gains. But now, that is apparently going to be penalised, we’re being punished for having done what we’ve been told to do for 30, 40 years – invest in property, buy stocks and shares.” Higher CGT may be easier to stomach, Ben said, if the government went after “the genuinely rich” who have made use of tax avoidance loopholes. “I don’t see Starmer or Reeves as having the political nous to drive real change, and that is the biggest concern.” ‘Scrap £20,000 Isas – they’re tax breaks for the rich’ “There’s nothing I particularly fear on a personal level,” said 78-year-old Dianne Moyes, a retired teacher from Cockermouth, Cumbria. “I do think, though, that the rich need to pay more. Unearned income from property and land should be taxed more, second-home owners should be taxed to the hilt. “My big beef is Isas, though. These were brought in to encourage ordinary people to save up to £3,000 a year tax-free. Then the Conservatives came in and put it up to £20,000, and it’s now a tax break for the rich. “How many couples can save £40,000 a year? Only very rich people. I do think people should be encouraged to save for retirement, but I hope this will be put back down to £5,000 in the budget.” The tax-free basic personal allowance, which has been at £12,570 since the 2021-22 tax year, should be unfrozen, Moyes believes, as the freeze has dragged many people on tiny incomes into paying income tax. “Increasing employer NICs – I worry about that being an additional burden for pubs and cafes that have been struggling since Covid; I’m not happy about that. “I think squeezing the rich is what we should be doing. Who are the rich? I don’t think I’d consider people on under £80,000 rich, perhaps those over, but it depends.”