Keir Starmer was pressed during PMQs about the possibility of a significant increase in income tax in the upcoming Budget, but he did not definitively rule it out. While the Prime Minister assured that there would be no return to austerity measures, he avoided reiterating Labour’s pledge from the last General Election not to raise taxes for working individuals, including income tax, VAT, and national insurance.
When questioned by Tory leader Kemi Badenoch, Mr. Starmer evaded directly addressing the commitment and instead mentioned that the government would unveil its fiscal plans at Chancellor Rachel Reeves’s Budget presentation on November 26. Badenoch reminded the Prime Minister of Labour’s promise from the previous year not to raise income tax, national insurance, or VAT, seeking confirmation of his adherence to those promises.
In response, Starmer shifted the focus to the economy’s positive indicators, citing higher-than-expected retail sales, lower inflation rates, upgraded growth projections, and record highs in the UK stock market. Reiterating that the Budget details would be disclosed on November 26, he emphasized a commitment to bolstering the economy, reducing NHS waiting lists, and securing a brighter future for the nation.
The Prime Minister also pointed out that no government typically reveals its budgetary plans prior to the Budget announcement. Speculation has arisen that Chancellor Reeves may be contemplating an income tax increase to address a significant budget deficit, with a potential option being the addition of 1p to the basic income tax rate, generating an estimated £8 billion in revenue.
Furthermore, there have been suggestions, as reported by The Guardian, that the Budget could include a rise in higher income tax rates. Currently, individuals earning over £50,271 fall into the 40% tax bracket, while those with incomes exceeding £125,140 are subject to a 45% tax rate.
A Treasury spokesperson declined to comment on the speculation surrounding potential tax adjustments, affirming a policy of not discussing proposed tax changes in advance.
