The first budget under Prime Minister Sir Keir Starmer's new administration is "going to be painful," he has warned. It will be released on October 30.

However, Labour has said that it will not increase income taxes, national insurance, or value added tax (VAT) for "working people".

Below are the potential tax increase:

1. Capital Gains Tax

This is levied on the gains realised from the sale of an asset whose value has grown; stocks that aren't kept in ISAs or second houses are two examples of assets that qualify.

In addition to individuals, self-employed sole traders, business partnership partners, and company owners are also required to pay capital gains tax (CGT).

It begins at 10% on earnings over £3,000 (or 18% on residential property). After that, it increases to 24% on residential property and 20% on any amount beyond the base tax rate.

2. Pension Tax Relief

Up to certain limitations, tax assistance is granted to individuals or their employers who contribute to private pension plans.

A portion of an individual's wages that may have been withheld by the government for taxes can now be saved for retirement thanks to the relief.

The current system provides tax relief to savers at the same rate as income tax; that is, basic rate taxpayers, receive a 20% tax relief, while higher rate taxpayers receive a 40% or 45% tax relief.

Tom Selby, head of public policy at AJ Bell, notes that there is a lot of conjecture about the possibility of introducing a flat rate of pension tax relief in the run-up to major political events like the Budget.

Although the IFS (Institute for Fiscal Studies) has indicated that doing so may generate "billions" for the government, this would imply that the system is less generous for higher earnings.

3. Stealth Tax

Introducing a "stealth tax," or a method of generating revenue that isn't formally designated as a tax, is another approach.

The Institute for Fiscal Studies (IFS) director, Paul Johnson, thinks that concentrating on tax thresholds—the amount of money that may be earned before any taxes begin to be paid—would be the most obvious way to find a solution.

As per the strategy implemented by the previous administration, the income tax and national insurance thresholds are now set to remain unchanged until 2028. However, Labour may decide to keep them after this date.

The "fiscal drag" effect, which sees more individuals "dragged" into paying greater rates of tax as their salaries grow, makes the program essentially a tax increase.

4. Increasing Inheritance Tax

Over £325,000 in value, inheritance tax is levied on the portion of a dead person's estate that is subject to the 40% rate at present.

However, it applies to less than 20% of estates.

If the estate is worth less than £325,000 or if anything over this amount is bequeathed to a spouse, civil partner, or charity, no tax is due.

Furthermore, the limit may increase to £500,000 if a person's property is included in their inheritance and their children and grandchildren are eligible to receive it.

Ms. Reeves has the option to reduce the relief offered on certain inherited assets or increase the inheritance tax rate.

These consist of pension funds and agricultural land, both of which are transferable tax-free.

(Sources: bbc.co.uk)