It’s a curious thing, this sense of waiting for a Budget. For most, it’s an exercise in mild anxiety – a check to see whether wine duty is up again or whether you can still afford to fill the tank. But for business owners in London right now, the wait for Rachel Reeves’ first full Budget on 26 November feels less like a nervous twitch and more like a death row countdown.
Charlie Gilkes, who co-founded Inception Group and runs some of London’s most imaginative bars – Mr Fogg’s, Bunga Bunga, the kind of places where post-pandemic optimism briefly came alive again – summed it up with alarming accuracy: “It feels like waiting on death row, waiting until the very last moment to let us know whether she will grant a stay of execution.”
And you can see his point. Reeves’ Budget, which has been rescheduled, delayed, and wrapped in more mystery than a Bond villain’s plot, is arriving under the kind of cloud that usually means someone’s about to pay – and it’ll probably be London.
For weeks now, the rumours have been circulating through Westminster corridors like wasps around a picnic: a wealth tax here, a mansion tax there, a shake-up of partnerships, a business rates “super multiplier”. Each idea lands like another nail being gently tapped into the coffin of the capital’s competitiveness.
The problem is not that the government wants to raise money – everyone knows the country’s finances look like a student overdraft in week one of term. The problem is who they’re going to shake down to do it. Because when politicians say “we all need to contribute,” what they often mean is “London can pay.”
Let’s put this in perspective. London generates £618 billion a year in GDP – roughly 22 per cent of the UK total. Add the South East, and you’re close to half. The capital and its surrounds contribute nearly 30 per cent of all income tax and more than 30 per cent of business rates. It’s the engine room of the UK economy, the bit that keeps the lights on while politicians from every party take turns kicking it in the shins.
And yet, Reeves’ team seem ready to push through reforms that will disproportionately batter the capital’s businesses. The “super multiplier” for properties with rateable values over £500,000 – a neat way of saying “we’ll tax your London office more because it looks expensive” – could mean rates as high as 58p in the pound.
To call that punitive would be an understatement. It’s an electric shock to every business with a W1 postcode. It doesn’t matter that these companies are already shelling out eye-watering sums for rent, staffing and utilities – the Treasury still wants its slice, preferably before the till opens.
David Jones of Avison Young pointed out the obvious but crucial truth: business rates are a direct overhead. They don’t come out of profit; they come out of existence. You pay them whether you’re making money or not. It’s the fiscal equivalent of being asked to chip in for your own executioner’s new axe.
And then there’s the wealth tax carousel. Reeves’ team is said to be looking at removing the capital gains exemption on homes worth more than £1.5 million. That might sound like it targets the super-rich, but in London that’s not a mansion – it’s a family home with a kitchen extension and a decent postcode. Roughly 11 per cent of London properties sit above that threshold, compared to 2 per cent elsewhere.
James Evans of Douglas & Gordon hit the nail on the head: “In many neighbourhoods, £1.5 million is far from a mansion.” Quite. It’s a three-bed terrace in Clapham with peeling paintwork and a leaking skylight. If that’s “wealth,” then Britain’s definition of luxury needs a serious reality check.
Add to that the possible 1 per cent annual levy on homes over £2 million, and you’ve got a policy cocktail that would make even Mr Fogg wince. These aren’t just taxes; they’re deterrents – neon signs flashing “London: Closed for Business” to anyone thinking of investing, relocating, or even staying put.
And let’s not forget the white-collar crowd. Reeves is reportedly eyeing changes to how partnership income is taxed, which could hit the capital’s law firms and consultancies squarely in the solar plexus. Partners who earn seven figures might not be your first sympathy vote, but when they leave – and they will leave, because Dubai, New York and Singapore all smile more kindly on their tax codes – the ripple effect will hit everything from sandwich shops to spin studios.
Charlie Gilkes isn’t just speaking for himself. He’s speaking for a city that’s been through hell these past few years – from lockdowns that gutted hospitality to staffing crises, inflation, rent hikes and endless policy tinkering. What London needs is stability, predictability, a sense that the rules won’t be rewritten every six months. What it’s getting instead is a Treasury that seems to view its success as a problem to be solved.
It’s a funny kind of masochism that defines our politics: punish the productive, milk the metropolitan, and then act surprised when the rest of the country runs dry.
London doesn’t want special treatment. It just wants recognition that when you squeeze the capital, the whole of Britain feels the pressure. The trains built in Derby, the fabrics woven in Huddersfield, the wine poured in Soho – they’re all part of the same chain. Cut off the top, and the bottom collapses.
So yes, as Reeves sharpens her red pen and business owners sit counting the days until the 26th, it does feel like waiting on death row. But perhaps, just perhaps, the Chancellor will look up at the gallows, take a deep breath, and decide that execution isn’t quite the growth strategy Britain needs right now.
Until then, we wait – strapped in, chin up, praying for a last-minute reprieve.
Read more:
Waiting on Reeves: London entrepreneurs face the gallows