It’s strange, this feeling of waiting for a budget. For most, it’s an exercise in mild anxiety – a test of whether wine taxes will go up again or whether you can still afford to fill the tank. But for business owners in London, the wait for Rachel Reeves’ first full budget on November 26 currently feels less like a nervous twitch and more like a death row countdown.
Charlie Gilkes, co-founder of Inception Group and operator of some of London’s most imaginative bars – Mr. Fogg’s, Bunga Bunga, the places where post-pandemic optimism was briefly revived – summed it up with alarming precision: “It feels like waiting on death row, waiting until the very last moment to tell us whether they will grant a stay of execution.”
And you can see his point of view. Reeves’ budget, rescheduled, delayed and shrouded in more mystery than a Bond villain’s plot, arrives under the kind of cloud that usually means someone is about to pay up – and that will probably be London.
For weeks the rumors have been circulating like picnic wasps through the corridors of Westminster: a wealth tax here, a property tax there, a restructuring of partnerships, a “super multiplier” for business rates. Each idea lands like another nail gently hammered into the coffin of the capital’s competitiveness.
The problem isn’t that the government wants to raise money – everyone knows the country’s finances look like an overdraft for students in the first week of term. The problem is who they will force to do it. Because when politicians say: “We all have to contribute”, what they often mean is: “London can pay.”
Let’s put this into perspective. London generates an annual GDP of £618 billion – around 22 percent of the UK’s total gross domestic product. Add the southeast and you’re almost halfway there. The capital and its surroundings contribute almost 30 percent of all income taxes and more than 30 percent of trade taxes. It is the engine room of the British economy, the part that keeps the lights on while politicians from all parties take their turns kicking it in the shins.
And yet Reeves’ team appears poised to push through reforms that will disproportionately burden the capital’s businesses. The “super multiplier” for properties with a rateable value of over £500,000 – a nice way of saying “we’re going to tax your London office more because it looks expensive” – could mean interest rates of up to 58p per pound.
To call it punitive would be an understatement. It’s an electric shock for any business with a W1 postcode. It doesn’t matter that these companies are already spending exorbitant amounts of money on rent, staff and utilities – the Treasury still wants its share, ideally before the till opens.
Avison Young’s David Jones pointed out the obvious but crucial truth: business rates are a direct overhead. They don’t come for profit; they come from existence. You pay them whether you make money or not. It’s the tax equivalent of asking you to help pay for your own executioner’s new axe.
And then there is the wealth tax carousel. Reeves’ team is reportedly considering removing the capital gains tax exemption on homes worth more than £1.5 million. This might sound like it’s aimed at the super-rich, but in London this isn’t a mansion – it’s a family home with a kitchen extension and a decent postcode. Around 11 per cent of properties in London are above this threshold, compared to 2 per cent elsewhere.
James Evans of Douglas & Gordon put it best: “In many areas, £1.5 million is a long way from a mansion.” Quite. It’s a three-bed terrace in Clapham with peeling paint and a leaky skylight. If this is “wealth”, then the British definition of luxury needs a serious reality check.
Add to that the possible 1 per cent annual levy on houses over £2 million and you get a political cocktail that would make even Mr Fogg cringe. This isn’t just about taxes; They’re off-putting – neon signs saying “London: Closed” to anyone thinking about investing, moving or even staying there.
And let’s not forget the employees. Reeves is reportedly considering changes to the taxation of partnership income that could drive the capital’s law firms and consultancies straight to the point of insanity. Partners earning seven figures may not be your first vote of sympathy, but when they leave — and they will, because Dubai, New York and Singapore are all smiling more kindly about their tax laws — the ripple effect will hit everything from sandwich shops to spin studios.
Charlie Gilkes doesn’t just speak for himself. He speaks for a city that has been through hell in recent years – from lockdowns that devastated the hospitality industry to workforce crises, inflation, rent increases and endless political tinkering. What London needs is stability, predictability and a sense that the rules are not being rewritten every six months. What it gets instead is a Treasury Department that appears to view its success as a problem to be solved.
It’s a strange kind of masochism that governs our politics: punishing the productive, milking the city dwellers, and then acting surprised when the rest of the country dries up.
London doesn’t want special treatment. It’s just a matter of recognizing that if you put the capital under pressure, the whole of Britain will feel the pressure. The trains built in Derby, the fabrics woven in Huddersfield, the wine served in Soho – they are all part of the same chain. Cut off the top and the bottom collapses.
So yeah, while Reeves sharpens her red pencil and business owners count the days until the 26th, it feels like waiting on death row. But maybe, just maybe, the Chancellor will look up at the gallows, take a deep breath and conclude that implementation isn’t quite the growth strategy Britain needs right now.
Until then, we wait – strapped in, heads held high, praying for a last-minute reprieve.
