Budget 2024 latest: Labour insists income tax threshold freeze would not break manifesto pledge

Speculation is mounting ahead of 30 October

Starmer refuses to rule out national insurance rise at PMQs

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.

Key Points

• When is the 2024 Budget and what might be in it?
• Government will keep manifesto pledges, says Starmer
• Ministers plead with PM to soften Reeves’ spending cuts
• Inflation falls below 2% target for first time in three years
• Proposed national insurance hike sparks row

[18 October 2024 08:57 · Millie Cooke]

Rachel Reeves to push forward with £3bn sickness benefits cut in Budget

Rachel Reeves is understood to be considering about £3bn of cuts to the welfare bill over the next four years by restricting access to sickness benefits, as the chancellor embarks on a brutal cost-cutting mission to fill a so-called £22 billion black hole left by the Tories.

The chancellor is expected to save the £3bn sum by committing to the previous government’s plans to reform work capability rules.

[18 October 2024 07:00 · Albert Toth]

Independent readers name their priorities for Rachel Reeves’ looming Labour budget

When we asked what you thought should be included in the budget, responses from Independent readers varied widely.

Many called for a fairer tax system and more direct contributions for public services, while others petitioned for fewer regulations and ‘red tape’ to improve productivity.

[18 October 2024 07:00 · Archie Mitchell]

ICYMI: 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.

[18 October 2024 04:00 · Albert Toth]

Budget rumours: Capital Gains reform

Capital Gains Tax (CGT) is paid on the profit made when an asset which has increased in value is sold. It is applied to things like the sale of personal possessions worth more than £6,000 (apart from a car), property that’s not the seller’s main home, shares and business assets.

It is charged at 10 or 18 percent for basic rate taxpayers, and 20 or 24 for higher or additional rate earners. There is a tax-free allowance of £3,000.

There are several ways CGT could be changed. In the run-up to the election, the Lib Dems and Greens both said they would rethink the tax bands to be more similar to income tax, raising an estimated £5.2bn a year.

[18 October 2024 01:00 · Archie Mitchell]

Analysis: How make-or-break Budget has fractured Keir Starmer’s cabinet

Rachel Reeves’ Budget is a make-or-break moment for Sir Keir Starmer’s government, potentially sparking a decade of national renewal – or sowing the seeds of Labour’s downfall.

The prime minister’s poll ratings are at rock bottom after just over 100 days in charge, and the much-hyped “tough choices” to be unveiled on October 30 will likely do little to help boost his appeal.

[17 October 2024 22:00 · Albert Toth]

ICYMI: 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.

[17 October 2024 19:00 · Albert Toth]

Budget rumours: Private equity profits

In another manifesto pledge, Labour said it will announce more details on plans to close the private equity tax loophole in the October Budget.

Due to the ‘carried interest’ law, private equity fund managers pay only 28 per cent tax on their income, which is treated as capital gains. This was the result of a successful lobbying campaign in 1987.

Labour has vowed to change this, making managers pay the 45 per cent higher rate of income tax. It is estimated the change will raise around £600 million a year with just a few thousand people affected.

[17 October 2024 16:00 · Albert Toth]

Budget rumours: Employer National Insurance Contributions

National insurance contributions (NICs) are the UK’s second-largest tax after income tax. They are paid by both employees on their own earnings, and employers on the earnings of their employees.

Labour officials say they will uphold the manifesto pledge to not raise NICs for employees above the recently lowered rate of 8 per cent. However, speculation has mounted that this could leave the door open for an increase in the rate paid by employers, with both the chancellor and prime minister refusing to rule out the measure.

Employer NICs are currently paid at a flat rate of 13.8 per cent. Experts say an increase of just 1p could raise £8.5bn in 2025/26 and more for the following years.

[17 October 2024 13:20 · Albert Toth]

How make-or-break Budget has fractured Keir Starmer’s cabinet

Rachel Reeves’ Budget is a make-or-break moment for Sir Keir Starmer’s government, potentially sparking a decade of national renewal – or sowing the seeds of Labour’s downfall.

The prime minister’s poll ratings are at rock bottom after just over 100 days in charge, and the much-hyped “tough choices” to be unveiled on October 30 will likely do little to help boost his appeal.

[17 October 2024 11:25 · Albert Toth]

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.