Britain’s Institute for Fiscal Studies says Chancellor Rachel Reeves could raise tens of billions of pounds in extra revenue through targeted tax reforms without breaching Labour’s pledge not to raise the big three taxes. In a chapter of its 2025 budget assessment, the think tank outlines options, including ending capital gains tax relief on death, which would raise £2.3 billion in 2029-30 (€2.6 billion). It also notes that doubling council tax rates on the top two bands would raise £4.4 billion (€5.1 billion), with any additional cash flowing to local authorities. It also warns of a projected shortfall in the public finances of up to £50 billion (€57.5 billion).

Other ideas include reforming death duties to abolish the extra £175,000 tax-free allowance that can be used when passing on a primary residence to a direct descendant, which would raise around £6 billion (€6.9 billion). The plan also includes increasing the bank levy and the bank surcharge; together they are expected to raise £2.4 billion in 2025-26, and a one-percentage-point rise in the surcharge would add about £0.4 billion (€0.5 billion) in 2029-30. It also highlights potential gains from tackling non-compliance to narrow the gap between what the Government thinks should be paid and what is actually collected. Any extra revenue from changes to council tax would flow to local authorities unless grants are adjusted to bolster the Treasury.

IFS economist Isaac Delestre said Reeves would fall short if she limits ambitions to revenue-raising without broader reform. Extending the freeze on personal tax thresholds including NICs could raise around £10.4 billion a year from 2029-30, but that would breach Labour’s pledge on working people. The think tank also calls for reform of council tax to update banding from 1991 values and to replace stamp duty with a new recurrent property tax. The report forms part of the IFS budget assessment for 2025 and argues the Budget should set out steps toward a more rational tax system that supports taxpayers’ prosperity.