{"id":262165,"date":"2025-11-14T09:49:10","date_gmt":"2025-11-14T09:49:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/262165\/"},"modified":"2025-11-14T09:49:10","modified_gmt":"2025-11-14T09:49:10","slug":"rachel-reeves-expected-to-drop-plans-for-income-tax-rise","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/262165\/","title":{"rendered":"Rachel Reeves expected to drop plans for income tax rise"},"content":{"rendered":"

Kate WhannelPolitical reporter<\/p>\n

\"PAPA Media<\/p>\n

Rachel Reeves has dropped plans to increase income tax rates at the Budget on 26 November, according to reports in the Financial Times.<\/a><\/p>\n

The newspaper says the chancellor and prime minister U-turned on increasing the tax, which would have broken an election manifesto promise, over fears it would anger voters and Labour MPs.<\/p>\n

Speaking to BBC Breakfast, Culture Secretary Lisa Nandy said “no decisions were made or set in stone” until Reeves delivered the Budget in the House of Commons. <\/p>\n

In response to the reports, UK government bonds and the pound have come under pressure.<\/a><\/p>\n

The yield on the benchmark 10-year government bond has risen 0.11% or 11 basis points – a very big move in a short time. Sterling was also lower, falling 0.3% to 1.313 US dollars.<\/p>\n

Reeves had not publicly confirmed she would raise income tax rates but had refused to rule it out.<\/p>\n

Earlier this month, she also delivered a pre-Budget speech in which she emphasised the need to make “necessary choices” and warned that everyone would have to “contribute”. <\/p>\n

If the chancellor has decided not to increase income tax rates, she will have to explore other ways to raise money, in order to meet her self-imposed rules on debt and borrowing while filling a bigger-than-expected hole in the public finances of around \u00a320bn. <\/p>\n

She could still opt to extend a freeze on income tax and National Insurance (NI) thresholds. The freeze was introduced in April 2023 and had been due to expire in 2028. <\/p>\n

That would mean as salaries rise more people would be pulled above the income threshold at which they either start paying tax and NI or qualify for higher tax rates. <\/p>\n

The Institute for Fiscal Studies estimates extending the freeze by two years could raise \u00a38.3bn a year and would mean someone on the minimum wage would be liable to pay income tax if they worked just 18 hours a week. <\/p>\n

Another option would be to lower the thresholds which would raise more money than simply extending the freeze. <\/p>\n

Asked about the reports, Nandy said “What I can tell you is as somebody who sits around that cabinet table, who has discussions with Rachel and has known her for a long time, is that she won’t play fast and loose with people’s money.<\/p>\n

“She does take her promises seriously, and she will do everything that she can to make sure that those choices are the fairest possible choices.”<\/p>\n

Conservative leader Kemi Badenoch said: “One retreat doesn’t fix a Budget built on broken promises. <\/p>\n

“Reeves must guarantee no new taxes on work, businesses, homes or pensions – and she should go further by abolishing stamp duty.”<\/p>\n

Liberal Democrat Treasury spokeswoman Daisy Cooper said: “If true, this 11th hour screeching U-turn might just spare struggling families from yet another punch in the stomach Budget.”<\/p>\n

A Treasury spokesperson said: “We do not comment on speculation around changes to tax outside of fiscal events.”<\/p>\n

They added: “The chancellor will deliver a Budget that takes the fair choices to build strong foundations to secure Britain’s future.”<\/p>\n","protected":false},"excerpt":{"rendered":"Kate WhannelPolitical reporter PA Media Rachel Reeves has dropped plans to increase income tax rates at the Budget…\n","protected":false},"author":2,"featured_media":262166,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[49,50,51,47,52,48],"class_list":{"0":"post-262165","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/262165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=262165"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/262165\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/262166"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=262165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=262165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=262165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}