Overview
- Rachel Reeves has told the Office for Budget Responsibility she is preparing a personal tax rise, with reports pointing to a 2p income tax increase paired with a 2p employee National Insurance cut capped below about £50,270, raising an estimated £6bn a year.
- Under the reported shift, pensioners and landlords who do not pay employee NI would face higher bills, while many employees under the NI cap would see little change; Quilter estimates show £75,000 earners paying about £495 more, £100,000 about £995, and £125,000 about £1,745.
- The move risks breaching Labour’s manifesto pledge on taxes, prompting internal unease from deputy leader Lucy Powell and sharpening debate over how to balance fiscal rules and political promises.
- The Bank of England says uncertainty over the Budget and potential tax rises is already weighing on spending, investment and hiring, with firms reporting very high levels of uncertainty.
- Reports also suggest Reeves is considering extending frozen income tax thresholds to 2029–30, which Finder warns could pull around nine million people into higher bands by 2030.