Investing November 8, 2025 0 Comments

When Crisis Strikes, Will You Smash the Glass or Miss Your Golden Opportunity?

What a wild ride tax talk has become lately! Just when you think the public’s heard it all, someone floats the idea of dusting off the 200-year-old window tax — yes, the one that literally taxed sunlight. Imagine the irony in a world of gleaming skyscrapers and sprawling bifold doors. It’s almost laughable… until you realize governments might actually be considering it as a cash cow. Meanwhile, whispers about hiking income taxes — the very proposal ruled out before the last election — are creeping back into the spotlight. Could Rachel Reeves and Keir Starmer really be ready to eat their manifesto promises, driven by the hefty £100bn Brexit bill and a £40bn revenue black hole? Or is this just another round in the cynical political game of tax scare tactics? With the Budget looming on 26 November, the stakes couldn’t be higher — and the public’s patience wearing thinner than ever. Buckle up; this year’s fiscal drama might just steal the show. LEARN MORE

What caught my eye this week.

We’re at the point now where about the only potential tax hike that hasn’t been run past the committee of public opinion is a revival of the 200-year old window tax.

Don’t laugh! It could be a real revenue spinner in our era of skyscrapers in the City and bifold doors in the suburbs.

In the meantime, a rise in income taxes in the upcoming Budget seems to finally be – maybe – on the agenda.

Yes, those same higher income taxes that were ruled out ahead of the last election.

I have my doubts, but who knows. Perhaps Rachel Reeves and Keir Starmer believe the situation really is dire enough to warrant breaking the pledge? It’s already motived them to lift their silence on the £100bn hit to the economy – and the resulting black-hole-sized £40bn shortfall in state revenues – that Brexit has cost us.

Or maybe Labour thinks they might as well be hung for a sheep as a lamb, considering the kicking they got anyway for dancing around taxes on ‘working people’ with the last budget?

Or maybe it’s just another ill-advised attempt to scare us with a worst-case scenario so that the real medicine doesn’t taste so bad.

We’ll find out on 26 November. But hell will hath no fury like the voting public if income tax rates rise by a bald 2p in the pound without a ‘sterilising’ 2p cut in National Insurance – which would undo much of the revenue-raising potential anyway.

And cutting national insurance won’t help the legions of vote-happy pensioners…

A stitch in time

I happen to believe that from a bunch of very unpalatable options, just hiking the basic rate of income tax and getting on with it wouldn’t be the worst.

But that would be partially on the grounds that it’s such a game-changer that it could have quashed the rumours and uncertainty caused by chipping away at absolutely everything else – from pensions, ISAs, dividends, and capital gains to property and the rest – to the sidelines.

However we’ve already had another three or four months of uncertainty. It’s made people save more, spend less, dither about moving house, and thrown yet more sand into the wheels of our lacklustre economy.

Worse, we’ve already had last year’s employer’s NI hike. Which had exactly the effect everyone predicted it would on youth employment, and on the health of the hospitality sector too.

If a bandaid was going to be ripped off then 2024 was surely the better time to go for it.

Rumour treadmill

Here’s a flavour of this week’s speculation:

Chancellor refuses to rule out manifesto-breaking tax hikes – Sky
NIESR: hike income tax by 2-10p in the pound – This Is Money
How much would a 2p income tax rise cost you? – Which
Reeves also reportedly considering a 20% exit tax on UK leavers – Guardian
Stand down! Reeves said to cool on big cash ISA reforms – City AM
A 5% VAT cut on electricity bills in Budget will backfire, experts say – Guardian
How wealthy is ‘wealthy’, exactly? [Paywall] – FT

But that’s just a taste. I’ve run batches of budget speculation in these links for weeks, so thick and fast and indiscriminate have they come.

Of course what’s notably missing from most of the rumour-mongering is anything about spending cuts. I’ve probably read more about the two-child benefit cap being lifted – which will obviously cost yet more money – than on any mooted plans to curb spending.

It’s true the last round of so-called austerity under George Osborne didn’t do much for the UK. And perhaps it’s senseless to look to downsize government – or at least to stop it growing further – while the economy is only limping along.

But is this a different era? Rates are taking their time to fall, and we’ve borrowed much more money. There’s a growing feeling that we’re sleepwalking into a self-fulfilling prophecy.

I used to look forward to budgets. But I honestly just want this one to be over.

Have a great weekend!

From Monevator

Defensive asset allocation beyond the 60/40 portfolio – Monevator

Yes, you can eat risk-adjusted returns – Monevator [Mogul members]

From the archive-ator: How to choose a bond fund – Monevator

News

Bank of England holds its key rate at 4% – BBC

UK economic growth forecast downgraded for 2025 – Yahoo Finance

Construction sector suffers worst downturn since 2020 – This Is Money

Fixing Britain’s ‘worklessness’ crisis would cost business £6bn a year – Guardian

Motor finance backlash mounts, with calls to pull £4bn from lenders – City AM

UK children to get mortgage and budgeting lessons in school – This Is Money

Savills’ five-year forecast for house prices – This Is Money

AI-washing and the massive job cuts hitting the US economy – CNBC

Firm founded by winner of The Apprentice Harpreet Kaur collapses – City AM

The rise of a new American oligarchy – Oxfam

Products and services

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A review of Chip’s £500,000 prize savings account – Be Clever With Your Cash

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Why are workers abandoning their Nest pensions? – MoneyWeek

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Enjoy Apple CarPlay while you still can – The Atlantic

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