Labour leader Sir Keir Starmer has left the door open for a potential increase in income tax in the upcoming Autumn Budget, despite the party’s manifesto promise not to raise income tax, VAT, or national insurance contributions. This move has caused significant backlash and anxiety among taxpayers.
According to recent analysis by AJ Bell, if the government introduces an additional 1p on income tax, the impact on average earners could be substantial. For someone with the average UK salary of £35,000, their yearly tax bill would rise from £4,486 to £4,710 – an increase of more than £200 a year.
Lower earners would also feel the effect: a taxpayer earning £20,000 annually would see their tax payments increase from £1,486 to £1,560. Meanwhile, those earning £50,000 could face a rise from £7,486 to £7,860.
Rachel Vahey, Head of Public Policy at AJ Bell, commented, “If the Chancellor implements a 1p income tax rise across the board, many middle earners will experience a significant hike in their tax bills that could stretch household budgets.”
At Prime Minister’s Questions (PMQs), Starmer was pressed to reaffirm Labour’s previous commitment to keep income tax, VAT, and national insurance unchanged. Rather than offering reassurance, he said the government would unveil its plans at the Budget scheduled for November 26.
Tory leader Kemi Badenoch criticized the apparent policy reversal, reminding the PM that just four months ago, he had ruled out any tax hikes. “The economic mess they inherited is being fixed,” Starmer responded, but Badenoch argued, “Labour’s high taxes and overspending have damaged the economy, and now they want to hit taxpayers harder.”
Liberal Democrat Treasury spokesperson Daisy Cooper expressed concerns on behalf of the public, saying, “Many households are worried about this government’s U-turn and brace for further tax increases in the near future. Families will have to tighten their belts even more.”
With the budget announcement imminent, taxpayers are bracing for the financial impact of potential tax changes that may reshape household finances in the months ahead.