Chancellor could extend freeze on income tax thresholds to raise billions
Labour has refused to rule out extending the freeze on income tax thresholds in this month’s budget, ITV News Reporter Amy Lewis has the latest
The Prime Minister has insisted the Government will “keep our manifesto pledges” amid reports the Chancellor could extend the freeze on income tax thresholds in this month’s budget.
Rachel Reeves may be considering pushing the freeze beyond its current expiry date of 2028 in a move that could raise £7 billion, according to reports by the Financial Times.
Continuing the freeze could help plug some of the £40 billion gap the Chancellor is grappling with in an effort to avoid a return to austerity.
Labour’s manifesto promised not to increase rates of income tax, but included no mention of tax thresholds.
Other measures reported to be under consideration include increasing employers’ national insurance contributions, raising fuel duty for the first time since 2010, changes to rules on inheritance tax and stamp duty, and a levy on e-cigarettes, according to reports across the media.
The Treasury has so far declined to comment on budget speculation, but when asked about possible tax changes during a press conference in Berlin, Sir Keir Starmer said: “We are going to keep our manifesto pledges.”
He added: “I’m not going to pre-empt the individual measures that will be outlined by the Chancellor in due course.”
He went on: “This is going to be a Budget that will fix the foundations and rebuild our country.”
When asked a further question about potential inheritance tax rises, the Prime Minister said: “You’ll just have to wait until the Chancellor lays that out in full, but the structure if you like, the framework, is going to be to fix the foundations and to rebuild our country.”
Multiple changes to inheritance tax are being considered by ministers, though it is not certain how many people will end up paying more money, nor how much more they might pay.
The levy does not affect the vast majority of the public at the moment, with only 4% of deaths resulting in an inheritance tax charge as the threshold for the 40% charge is an estate above £325,000.
The Chancellor is also expected to honour the previous Tory government’s plans to make around £3 billion of cuts to welfare by reforming work capability rules in the budget.
Ms Reeves is also said to be considering bringing a stamp duty discount introduced by the Tories to an end, the Times newspaper reports, which is expected to raise £1.8 billion a year by 2029.
Other reports suggest a tax on vapes could be raised, and that fuel duty could be hiked for the first time in 14 years.
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