Rachel Reeves £30 Billion Dilemma: Are Businesses Facing the “Fourth Horseman”

A Sobering Backdrop to Economic Optimism

The UK’s latest public borrowing figures have delivered a sharp reality check for policymakers and businesses alike. Despite the fanfare surrounding President Trump’s second state visit and a headline £150 billion investment deal, the Office for National Statistics (ONS) has reported government borrowing of £18 billion in August – its highest monthly level in five years.

These numbers underscore the growing challenge for Chancellor Rachel Reeves as she prepares her first Autumn Budget, due on 26 November.

The “Fourth Horseman”: Tax Rises on the Horizon

Tom Goddard, Senior Associate warned that the figures all but guarantee tax hikes:

The fourth horseman of any Chancellors apocalypse (tax rises) will seemingly join the other three horseman of sluggish growth, a downgrade on productivity, and increased borrowing that will likely haunt Chancellor Reeves from now till Budget Day.

The government faces a reported £30 billion fiscal black hole. While Rachel Reeves has pledged not to raise income tax, VAT or National Insurance contributions (NIC), her options are narrowing.

Property and Inheritance Taxes: Limited Firepower

Looking at the stats published by HMRC, we can see that IHT, although showing an increase of 8.46% on the past 12 months compared to the year prior, took only £8.4bn from September 2024 to August 2025 (less than 1% of HMRC’s total receipts). Likewise, Stamp Duty Land Tax (SDLT), although showing an impressive 22.25% growth for the last 12 months compared to the prior period, only accounts for 1.6% of total receipts.

Tom added:

SDLT may have its moment in the spotlight, no doubt of course exacerbated by the recent stories involving key political figures. However it is now clear that these tax reforms if used, will not bring in the money she was expecting based on the figures published today, unless of course a serious re-think is had. Other tax rises are now inevitable in the Autumn Budget.

Policy Context and Implications

The Chancellor’s self-imposed fiscal rules require debt to fall as a share of GDP within five years – a target already under strain from slower growth and rising borrowing costs. Rachel Reeves has staked political capital on not touching the main revenue drivers, yet the scale of the deficit suggests that more substantial measures, such as broadening existing tax bases or introducing new levies, may be unavoidable.

For businesses, this environment signals potential volatility in tax policy. Sudden or creative tax changes – particularly around property transactions, wealth transfers, or sector-specific levies could emerge as the government looks for revenue without breaching its headline promises.

Why It Matters to Businesses and Individuals

For corporates, the prospect of new or higher taxes can affect investment decisions, cashflow planning, and asset strategies. Individuals, particularly those with significant property holdings or estates may face higher costs on transactions or inheritance planning.

More broadly, the uncertainty can weigh on confidence, making it harder for businesses to plan long-term and for households to gauge disposable income.

What You Should Consider Next

Scenario Planning: Build flexibility into 2025 budgets to accommodate potential tax rises or changes in reliefs.

Property & Estate Strategy: Review property portfolios and inheritance plans of possible reforms to SDLT or IHT.

Engage Early: Businesses should engage with advisers now to understand where their tax exposure is greatest and identify mitigation strategies.

Monitor Policy Signals: Watch for pre-Budget statements and leaks that may foreshadow the Chancellor’s “serious re-think.”

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact.