Starmer refuses to rule out extending freeze on tax thresholds

Becky MortonPolitical reporterUK ParliamentSir Keir Starmer has refused to rule out extending the freeze on tax thresholds, which has seen thousands and thousands of individuals dragged into paying larger charges. The freeze on Nationwide Insurance coverage (NI) and earnings tax thresholds, launched beneath the Conservatives, is at present as a result of finish in April 2028.However requested throughout Prime Minister’s Questions whether or not the federal government nonetheless deliberate to carry the freeze, Sir Keir solely mentioned he was dedicated to Labour’s election manifesto. This included a pledge to not enhance 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 larger charges – sometimes elevated yearly according to inflation. Nevertheless, earnings tax thresholds have been frozen since 2021/22. This implies individuals danger 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 may increase an estimated £7bn a yr. In her Price range speech final autumn, Chancellor Rachel Reeves mentioned extending the freeze “would damage working individuals” and pledged to carry thresholds according to inflation once more from 2028/29. Nevertheless, 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 write down a Price range upfront. We’re completely fastened on our fiscal guidelines. We stay dedicated to them,” he informed the Commons.”We stay dedicated to our Price range, 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 enhance earnings tax, Nationwide Insurance coverage or VAT. His reply to this was merely: “Sure.”The federal government’s self-imposed fiscal guidelines embody 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 probably.Watch: Tory chief focuses on tax at PMQsBadenoch additionally accused Sir Keir of “flirting” with the concept of a wealth tax – one thing some Labour MPs on the left of the social gathering have referred to as for.Supporters of the concept say a brand new 2% tax on belongings value greater than £10m may increase £24bn per yr.Nevertheless, critics argue such a transfer may 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 might be a tax on aspiration.”Requested if he would rule out a wealth tax, Sir Keir mentioned Labour had stabilised the economic 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 mentioned: “We will not simply tax our solution to development.”