As the United Kingdom approaches its much-anticipated Autumn Budget on November 26, 2025, the debate over the nation's fiscal future has taken center stage. At the heart of the discussion are two key figures: Chancellor Rachel Reeves, who is poised to unveil potentially sweeping changes to the tax regime, and former Prime Minister Rishi Sunak, now a newspaper columnist, who has offered pointed advice—and a warning—about the path the government might take.
Writing in The Sunday Times on October 26, Sunak drew on his extensive experience as both a former Chancellor and Prime Minister to caution against raising taxes as a means to bolster the country's finances. Instead, he argued, "Raising taxes would be a disaster for the UK — and particularly if increases are concentrated on a narrow base as Reeves tries to remain technically compliant with manifesto commitments. Such tax rises would be particularly distortionary and damaging to growth." According to Sunak, the choice facing Chancellor Reeves is stark: "spending cuts or tax rises." He believes that opting for the latter "will crush confidence still further and depress growth, making next year’s budget even more painful than this one will be." (The Sunday Times, October 26, 2025)
Sunak’s intervention comes at a critical moment, as the Labour government faces mounting pressure to address rising interest costs on Britain's long-term borrowing and concerns about the sustainability of public finances. The next Spending Review, as the UK budget is known, is now just weeks away. Reeves, meanwhile, has signaled her intentions with increasing clarity. On October 27, GB News reported that the Chancellor appeared to confirm a forthcoming tax hike, particularly targeting wealthier Britons. Reeves urged the nation's affluent to "contribute" more, suggesting that changes to the tax regime will be announced during the budget.
This apparent confirmation has sparked intense speculation about where the axe—or the scalpel—will fall. Will the government seek to close its budget gap through direct tax increases on income and wealth, or will it pursue more targeted levies on specific products and behaviors?
According to a report released by leading accountancy firm UHY Hacker Young on October 27, Reeves has significant fiscal headroom to increase so-called "sin taxes"—levies on less healthy or environmentally damaging products. The report notes that government receipts from these taxes have plummeted by 35% over the past decade, falling to £24.2 billion in 2024/25, which now accounts for just 2.8% of total revenues, down from 4.3% in 2015/16. This decline is attributed to a long-term shift in consumer habits, particularly away from tobacco and alcohol, partly due to repeated tax hikes and rising prices.
James Simmonds, a tax partner at UHY Hacker Young, believes the government may be eyeing further increases. "The government may seek to include new taxes on products it deems ‘unhealthy’ or ‘polluting’," Simmonds told The Grocer. "Traditional sin taxes now collect a small and shrinking slice of the pie for government coffers, a gap that Rachel Reeves may look to fill with further rises." He added, "It could also raise existing taxes on sugary drinks and plastic packaging. Given how little revenue they bring in, the government may feel there’s still room to push them up."
Adding fuel to the fire, the government is already expected to expand the Soft Drinks Industry Levy (SDIL) in April 2027, lowering the sugar threshold from 5g to 4g per 100ml—a move that could bring hundreds more products into the tax net. Meanwhile, the Food Foundation has called for Labour’s new food strategy to introduce a levy on high fat, salt, and sugar (HFSS) food categories beyond soft drinks, arguing that the funds could subsidize initiatives supporting affordable, healthy diets for the country’s poorest families. This follows a report finding that one in seven UK households with children are struggling to afford food, with millions cutting back on fruit and vegetable consumption to save money.
However, expanding such taxes is not without controversy. Industry groups, including the Food and Drink Federation (FDF), have voiced strong opposition. An FDF spokeswoman stated, "We believe that ensuring a stable regulatory environment is the best way to support continued investment from businesses. Food and drink prices are already rising at a rate which is significantly above the UK’s long-term average and many comparable EU countries. There’s also a lack of evidence that food taxes have a long-term effect on consumer purchasing. With these two things in mind, rather than additional taxes we want to work with government to help businesses further invest in developing healthier options, whilst avoiding measures that would increase food prices."
Soft drinks manufacturers have also pushed back, arguing that the planned SDIL threshold reduction will unfairly penalize companies that have already removed millions of calories from their products, while other food categories remain untaxed.
Yet, with the latest Office for National Statistics (ONS) figures showing a slight decrease in the cost of food and non-alcoholic drinks in September—the first drop since May 2024—ministers are under renewed pressure from the industry to resist further tax increases, especially as inflationary pressures begin to ease, albeit modestly.
Sunak, for his part, has suggested that the government’s fiscal challenges are not as dire as they may seem. He pointed out that the UK now issues less long-term debt than before, making funding cheaper this fiscal year compared to the previous two. "A bigger buffer could create a virtuous circle: bond markets would be reassured by the additional headroom and so feel more confident in the UK’s finances, reducing government borrowing costs. It’s clearly the right thing to do, and much better than the alternative of months of uncertainty every year," Sunak wrote in The Sunday Times.
Amid these high-stakes debates, Sunak has also shared insights into his personal life after stepping away from frontline politics. Now a backbench MP for Richmond and Northallerton, he described the joy of spending more time with his wife, Akshata Murty, and their two children. "I am happy because as a family it’s been lovely reconnecting and having the luxury of spending time [together], the four of us, that we haven’t had for ages. I was an absentee dad and husband for five years because of my jobs," he told The Times. Sunak’s new role as a columnist comes with a philanthropic twist: all fees from his writing will be donated to the Richmond Project, an education charity he founded to tackle numeracy issues among UK children. "People feel confident saying they aren’t good at maths, but we want to change that. Whatever you do, maths helps, whether it’s fantasy football, planning for holidays or buying a car," Sunak explained.
As for his political future, Sunak hinted that he might not be finished just yet. When asked about a possible return to frontline politics, he replied, "I don’t think I’m over yet and nor is the Conservative Party."
With the Autumn Budget looming, the UK stands at a crossroads. The decisions made by Chancellor Reeves—and the reactions from figures like Sunak, industry leaders, and advocacy groups—will shape not only the nation’s fiscal landscape but the daily lives of millions of Britons. The weeks ahead promise both uncertainty and intense debate, as the country waits to see which path its leaders will choose.
