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1h ago

Resolution Foundation Urges 2p Income Tax Rise Paired With 2p NI Cut Ahead of Reeves’s Budget

The Labour‑linked think tank says a revenue‑neutral swap would broaden the tax base to reassure markets.

Rachel Reeves is under pressure to raise taxes Jordan Pettitt Provider: via REUTERS Source: Pool
Rachel Reeves will deliver her Budget in November (Jordan Pettitt/Pool via REUTERS)
Rachel Reeves should undertake serious tax reforms, says the Institute for Government

Overview

  • The report proposes cutting employee national insurance by 2p and raising income tax rates by 2p, a switch it estimates would raise about £6bn a year by reaching pensioners, landlords and others who do not pay employee NI.
  • The move is framed as protecting workers’ take‑home pay, though it would test Labour’s pledge not to raise income tax, national insurance or VAT, and the Treasury declined to comment on whether it will be adopted.
  • The foundation outlines a wider package that includes lowering the VAT registration threshold from £90,000 to £30,000 over time, higher dividend taxes, carbon charges on long‑haul flights and shipping, broader sugar and salt levies, and action on unpaid small‑business corporation tax.
  • Business groups warn further tax rises could hurt firms and lift prices, with the British Retail Consortium cautioning that extra costs risk pushing inflation higher.
  • The proposals carry political weight because former Resolution Foundation figures now help shape the November 26 Budget, as the think tank estimates around £20bn of additional tax measures may be needed by 2029/30.