It's a strange thing, this feeling of waiting for the budget. For most of us, it's an exercise in mild anxiety – a check to see whether wine duty has increased again or whether we can still afford to fill the tank. But for business owners in London right now, the wait for Rachel Reeves's first full Budget on November 26 feels less like a gnawing panic and more like a countdown to death.
Charlie Gilkes, who co-founded Inception Group and runs some of London's most imaginative bars – Mister Fog's, Bunga Bunga, places where post-pandemic optimism reignited – summed it up with alarming accuracy: “It feels like waiting on death row, waiting until the last moment to let us know whether or not she'll stay the execution.”
And you can see his point. Reeves' budget, which has been rescheduled, delayed, and wrapped in more mystery than a Bond villain plot, is arriving under the kind of cloud that usually means someone's going to pay – and it'll probably be London.
For weeks now, rumors have been spreading like wasps around a picnic in the Westminster corridors: a wealth tax here, a mansion tax there, changes to partnerships, a business rates “super multiplier”. Each idea lands like another nail gently hammered into the coffin of capital's competitiveness.
The problem isn't that the government wants to raise money – everyone knows the country's financial situation looks like a student overdraft in the first week of term. The problem is who they will appoint to do this. Because when politicians say, “We all need to contribute,” what they often mean is “London can pay.”
Let's keep this in perspective. London produces £618 billion in GDP per year – about 22 per cent of the UK's total GDP. Add southeast, and you'll be closer to half. The capital and its surrounding areas contribute about 30 percent of all income taxes and more than 30 percent of business rates. It is the engine room of the UK economy, keeping the lights on while politicians from each party take turns kicking the can down the road.
And yet, Reeves' team looks set to push through reforms that would disproportionately affect the capital's businesses. The “super multiplier” for properties with a rateable value over £500,000 – a nice way of saying “we'll tax your London office more because it looks expensive” – could mean a rate as high as 58p in the pound.
It would be an exaggeration to call it punitive. This is a lightning bolt for every business with a W1 postcode. It doesn't matter that these companies are already spending eye-watering sums on rent, staffing and utilities – the Treasury still wants a piece of it, preferably before the tills open.
Avison Young's David Jones points out the obvious but important truth: business rates are direct overhead. They do not come from profit; They come out of existence. You pay them whether you are making money or not. This is the financial equivalent of asking for your own executioner's new axe.
And then there is the wealth tax carousel. Reeves' team is said to be considering removing the capital gains exemption on homes worth more than £1.5 million. It may seem like it targets the ultra-rich, but this is no mansion in London – it's a family home with a kitchen extension and a decent postcode. About 11 per cent of London properties are above that limit, compared with 2 per cent elsewhere.
James Evans of Douglas & Gordon put it right: “In many neighbourhoods, £1.5 million is a long way from a mansion.” Extremely. This is a three-bed terrace in Clapham, with peeling paintwork and a leaky skylight. If that's “wealth”, then Britain's definition of luxury needs a serious reality check.
Add to this a potential 1 per cent annual levy on homes worth more than £2 million, and you get a policy cocktail that would make even Mr Fogg nervous. These are not just taxes; They are the deterrent – neon signs flashing “London: Closed for Business” to anyone thinking about investing, relocating or even staying.
And let's not forget the white-collar crowd. Reeves is reportedly eyeing changes to the way partnership income is taxed, which could directly impact the capital's law firms and consultants at Solar Plexus. The partners who earn seven figures may not be your first sympathy vote, but when they're gone – and they'll be gone, as Dubai, New York and Singapore all smile more kindly on their tax codes – it'll have an impact on everything from sandwich shops to spin studios.
Charlie Gilkes isn't just speaking for himself. He is speaking for a city that has been through hell in the last few years – from lockdowns to the collapse of hospitality to staff shortages, inflation, rising rents and endless policy tinkering. What London needs is stability, predictability, an understanding that the rules will not be rewritten every six months. What it gets instead is a treasury that sees its success as a problem to be solved.
It's a strange kind of malevolence that defines our politics: punishing the producer, milking the metropolis, and being surprised when the rest of the country goes dry.
London doesn't want special treatment. It just wants recognition that when you squeeze the capital, the whole of Britain feels the pressure. Trains made in Derby, clothes woven in Huddersfield, wine poured in Soho – they are all part of the same chain. Cut off the top, and the bottom collapses.
So yes, when Reeves is sharpening her red pen and the business owner is counting down the days until the 26th, it feels like he's waiting on death row. But maybe, just maybe, the Chancellor will look at the gallows, take a deep breath and decide that implementation is not the growth strategy Britain needs right now.
Until then, we wait – tied up, chin up, praying for last-minute relief.
Richard Alvin
Richard Elwyn is a serial entrepreneur, former adviser to the UK Government on small business and Honorary Teaching Fellow on Business at Lancaster University. Winner of the London Chamber of Commerce Business Person of the Year and Freeman of the City of London for his services to business and charity. Richard is also Group MD of Capital Business Media and SME business research company Trends Research, he is recognized as one of the UK's leading experts on the SME sector and an active angel investor and advisor to new start-up companies. Richard is also the host of the US-based business advice television show Save Our Business.
