Reeves considering tax hike for lawyers and accountants

Chancellor Rachel Reeves is considering changes to the tax system which would lead to some lawyers, accountants and doctors paying more, in next month's Budget.

The professions are among those which sometimes use limited liability partnerships (LLPs), meaning they are treated as self-employed and not subject to employers' National Insurance.

The Times reported that Reeves would impose a new charge on people using LLPs, which would be slightly lower than the 15% rate of employers' National Insurance.

Reeves is widely expected to raise taxes in her Budget on 26 November, after gloomy economic forecasts and a series of U-turns on welfare cuts made it harder for her to meet her own fiscal rules.

The chancellor has signalled she is likely to focus on wealthy individuals, saying "those with the broadest shoulders should pay their fair share".

A number of tax experts and think tanks have suggested extending employers' National Insurance to partnerships, arguing this would make the tax system fairer.

Supporters of the idea also point out it would mostly affect high earners.

Adam Corlett, principal economist at the Resolution Foundation, a think tank which focuses on people on low-to-middle incomes, said: "The chancellor will need to raise taxes in her upcoming Budget, and should do so in ways that improve the tax system.

"An important step would be to level the playing field in how different ways of working are treated, with wages currently taxed more than other forms of income."

Some analysts have estimated Reeves will have to raise taxes or cut spending by around £20bn to meet her "non-negotiable" financial rules.

These rules mean her plans must be projected to get government debt falling as a share of national income by 2029-30, and day-to-day government costs must be paid for by tax income rather than borrowing.

In its general election manifesto last year, Labour promised not to increase income tax, VAT and corporation tax, limiting the government's options to raise revenue.

The party also promised not to raise National Insurance - prompting a row last autumn when it announced a hike in the contributions paid by employers.

Sign up for our Politics Essential newsletter to keep up with the inner workings of Westminster and beyond.