𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Rachel Reeves has broken Labour’s manifesto commitment on taxes with her decision to freeze income tax thresholds, an influential economic think tank has said.

Labour promised in the run up to the 2024 general election not to raise taxes on working people, ruling out an increase in national insurance, the basic, higher or additional rates of income tax, and VAT.

At the Budget on Wednesday, the Chancellor announced she would extend a freeze in income tax thresholds until 2030, continuing a measure her predecessor Rishi Sunak intended to last until 2026 when he first introduced it.

It was later extended until 2028 when Jeremy Hunt was chancellor.

The Institute for Fiscal Studies (IFS) suggested Ms Reeves’ decision was akin to breaking Labour’s manifesto pledge.

The Chancellor has “found a way to cobble together a sizeable package without increasing the main rates of national insurance contributions, VAT or income tax”, it said.

But the think tank added: “Because it includes a freeze in national insurance thresholds, it also breaches the Government’s manifesto tax promise not to increase national insurance – as does the cap on salary sacrifice.

“And, as the Chancellor acknowledged, it clearly represents a tax rise on working people.”

People will be dragged in to paying 20% income tax if their earnings rise above £12,570, with the 40% rate from £50,271 and the 45% band from £125,140.

The freeze in income tax, as well as national insurance contributions, which will extend until 2030/31, will rake in £8.3 billion for the Exchequer in 2029/30.