Budget 2024 latest: Labour insists income tax threshold freeze would not break manifesto pledge
Speculation is mounting ahead of 30 October
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Sir Keir Starmer has insisted the government will keep its 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 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.
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.”
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
We’ll be bringing you all the latest updates ahead of the big event on 30 October here, on The Independent’s liveblog.
Millionaires urge Reeves to raise £14bn from capital gains tax changes at Budget
Rachel Reeves should increase capital gains tax (CGT) at Labour’s upcoming Budget, a group of millionaire business owners have urged, estimating the measure would raise £14bn a year.
In a report by the IPPR think-tank, analysts have consulted with wealthy entrepreneurs who say higher CGT would not have stopped them from making investments in the UK.
Millionaires urge Reeves to raise £14bn from capital gains tax changes at Budget
Government analysis has previously all but ruled out the measures
Angela Rayner leads Cabinet revolt against Reeves’ ‘huge’ Budget cuts
Sir Keir Starmer is facing a backlash from Angela Rayner and his cabinet over “huge” cuts to departmental spending to be unveiled in Rachel Reeves’ Budget.
The prime minister has received letters from senior ministers raising concerns about the spending cuts after a number spoke out against the measures at Tuesday’s cabinet meeting.
Angela Rayner leads Cabinet revolt against Reeves’ ‘huge’ Budget cuts
Senior ministers are pushing back against cuts as Rachel Reeves finalises her first Budget as chancellor
Ministers plead with PM to soften Reeves’ spending cuts
Several ministers have reportedly written to Number 10 urging the prime minister to soften departmental spending cuts laid out in the upcoming Budget.
The requests have gone over the head of Rachel Reeves, who is reportedly looking to find around £40bn in tax rises and spending cuts on 30 October.
It is an embarrassing show of disunity for the prime minister, indicating that ministers and Ms Reeves may not be seeing eye-to-eye on departmental budgets.
It’s understood that the complaints have come from the Ministry of Housing, Department for Transport, Ministry of Justice. Unlike health and education, these departments have ‘unprotected’ budgets, meaning they could see severe cuts.
One Cabinet minister told Sky News: “The briefing doesn’t match the reality. It’s pain this year, and pain next year. We’re simply going to be digging a hole which we end up filling in later in the year.”
Budget rumours: business rates reform
In its election manifesto, Labour said it was committed to reforming the current business rates system “so we can raise the same revenue but in a fairer way”.
What this means has not been spelt out by the party, but it said the new system will be designed to “level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”.
It’s thought this could take the form of an immediate cut to the rates, while also closing loopholes which allow some firms to avoid tax. This will come as welcome news to smaller business owners, but Labour will be careful to ensure their reform maintains a monetary net zero.
Exchequer secretary James Murray MP confirmed this at a Labour conference fringe event hosted by the British Retail Consortium, saying: “It’s within the current envelope. It’s all about raising the same amount of money overall, that’s the commitment.”
ICYMI: Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
Inflation has dropped below 2 per cent for the first time in over three years, raising hopes that the Bank will cut interest rates in November. The decrease exceeded many economist predictions, with the Consumer Price Index (CPI) falling to 1.7 per cent
But some experts have warned that the rate drop is “badly timed” for many people, as it will be a key factor in how much benefits are uprated by the DWP next April.
Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
Lowered inflation rate will decide how much benefits are increased next year
Budget rumours: fuel Duty increase
Fuel duties, or taxes, apply to purchases of petrol, diesel and a variety of other fuels used both for vehicles and domestic heating.
The level of fuel duty depends on the type of fuel used, with a litre of petrol, diesel, biodiesel and bioethanol attracting a fuel duty of 52.95p. It was cut by 5p by the Conservatives in 2022, after being frozen at 57.95p since 2011.
It represents a significant source of revenue for the government, expected to raise £24.7 billion in 2023-24, according to the Office for Budget Responsibility – equivalent to 2.2 per cent of all receipts.
Scrapping the 5p cut would raise the government an estimated £2bn. However, doing so would not automatically force fuel retailers to bring down their costs, likely meaning higher fees for motorists, at least in the short term.
ICYMI: Rachel Reeves boosted by big drop in inflation as she seeks £40bn in Budget tax rises
Rachel Reeves has been boosted by a sharp drop in inflation as she seeks to find £40bn of tax hikes and spending cuts in this month’s Budget.
The chancellor will welcome the dip, which saw inflation fall under the Bank of England’s 2 per cent target for the first time in more than three years, as she prepares for what promises to be a brutal Budget.
Rachel Reeves boosted by big drop in inflation as she seeks £40bn in Budget tax rises
The fall in inflation comes as Rachel Reeves looks for £40bn of spending cuts and tax hikes in the October 30 Budget
Budget rumours: welfare spending cuts
Labour has made no secret of its ambition to reduce the government’s welfare spending bill, so Ms Reeves will likely take the Budget as her opportunity to do so.
Speaking at Labour’s party conference, the prime minister said: “We will get the welfare bill down because we will tackle long-term sickness and support people back to work.”
What has been confirmed is a crackdown on benefit fraud, which looks to save £1.6bn over the next five years. Also possible is the mooted reform to disability benefits through personal independence payments (PIP) or the work capability assessment (WCA).
What would you like to see announced in Rachel Reeves’ budget?
We would like to hear your thoughts on what you would like to see introduced in Reeves’ Budget. Should she focus on measures to support homeowners, such as the Freedom to Buy scheme? Or would you prefer a focus on closing tax loopholes, such as abolishing non-dom status, to ensure a fairer tax system?
Tell us what you’d like to see announced in Labour’s first budget
Prime Minister Keir Starmer has already warned of ‘difficult decisions’ – but what measures and policies would you like to see introduced in Labour’s first autumn statement?
Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
Inflation has dropped below 2 per cent for the first time in over three years, raising hopes that the Bank will cut interest rates in November. The decrease exceeded many economist predictions, with the Consumer Price Index (CPI) falling to 1.7 per cent
But some experts have warned that the rate drop is “badly timed” for many people, as it will be a key factor in how much benefits are uprated by the DWP next April.
Inflation drop ‘badly-timed’ for benefit claimants as next increase revealed
Lowered inflation rate will decide how much benefits are increased next year
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