Starmer refuses to rule out extending freeze on tax thresholds

Sir Keir Starmer has refused to rule out extending the freeze on tax thresholds, which has seen tens of millions of individuals dragged into paying increased charges.

The freeze on Nationwide Insurance coverage (NI) and earnings tax thresholds, launched beneath the Conservatives, is presently as a consequence of finish in April 2028.

However requested throughout Prime Minister’s Questions whether or not the federal government nonetheless deliberate to raise the freeze, Sir Keir solely stated he was dedicated to Labour’s election manifesto.

This included a pledge to not improve Nationwide Insurance coverage, earnings tax or VAT – however no particular promise on thresholds.

Tax thresholds – the earnings ranges at which individuals begin paying Nationwide Insurance coverage or earnings tax, or must pay increased charges – sometimes elevated yearly according to inflation.

Nonetheless, earnings tax thresholds have been frozen since 2021/22.

This implies folks threat being dragged into a better tax band, or paying tax on their earnings for the primary time, in the event that they get a pay rise.

Extending the freeze till 2029/30 might elevate an estimated £7bn a 12 months.

In her Funds speech final autumn, Chancellor Rachel Reeves stated extending the freeze “would damage working folks” and pledged to raise thresholds according to inflation once more from 2028/29.

Nonetheless, requested by Conservative chief Kemi Badenoch if this was nonetheless authorities coverage, Sir Keir didn’t rule out persevering with the freeze.

“No prime minister or chancellor goes to jot down a Funds prematurely. We’re completely fastened on our fiscal guidelines. We stay dedicated to them,” he informed the Commons.

“We stay dedicated to our Funds, to our manifesto commitments.”

The PM’s reply contrasted to his earlier response to Badenoch, when requested if he stood by Labour’s promise to not improve earnings tax, Nationwide Insurance coverage or VAT.

His reply to this was merely: “Sure.”

The federal government’s self-imposed fiscal guidelines embrace not borrowing to fund day-to-day spending and to get authorities debt falling as a share of nationwide earnings by 2029/29.

The foundations are designed to reassure monetary markets however sticking to them limits the federal government’s choices and makes tax rises extra doubtless.

Badenoch stated a continued freeze would imply “tens of millions of our poorest pensioners face being dragged into earnings tax for the primary time ever”, dubbing this a “retirement tax”.

Badenoch additionally accused Sir Keir of “flirting” with the thought of a wealth tax – one thing some Labour MPs on the left of the celebration have referred to as for.

Supporters of the thought say a brand new 2% tax on property price greater than £10m might elevate £24bn per 12 months.

Nonetheless, critics argue such a transfer might see rich people depart the nation.

Badenoch informed the Commons: “Let’s be trustworthy about what meaning, it is a tax on all of our constituents’ financial savings, on their homes, on their pensions, it could be a tax on aspiration.”

Requested if he would rule out a wealth tax, Sir Keir stated Labour had stabilised the financial system and “do not want classes” from the Conservatives.

Pressed once more on whether or not he would introduce a wealth tax by Inexperienced MP Adrian Ramsay, who instructed “these with the broadest shoulders ought to carry the most important burden”, Sir Keir stated: “We will not simply tax our method to development.”