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What's behind Rachel Reeves's 'hokey cokey' on income tax rises?
Stronger wage growth improved forecasts, reducing the need for a basic income tax hike, though the chancellor still plans £20 billion from other tax measures, Treasury sources said.
- On Thursday night, Chancellor Rachel Reeves dropped plans to raise income tax after a late decision, a reversal first reported in the Financial Times; Treasury sources said the hike is now unnecessary.
- OBR forecasts showing stronger receipts and Treasury sources say wage growth helped tax receipts, altering the chancellor's fiscal shortfall calculation last week.
- The government plans to freeze tax thresholds for two years, pulling millions of workers into higher bands and considering changes to pensions, salary‑sacrifice schemes, and electric vehicles.
- The reversal intensified perceptions of chaos in No 10 and triggered market volatility described as 'not normal', while a government figure denied links to the leadership crisis.
- Party insiders warned of the risks to the manifesto, noting raising the basic rate risked breaking Labour party's core pledge and Deputy Labour leader Lucy Powell urged adherence last week.
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Rachel Reeves does tax U-turn after better forecast from UK watchdog
Rachel Reeves, the chancellor of the exchequer, has dropped a plan to raise income taxes in the UK’s budget later this month after she received better forecasts from the fiscal watchdog than had been widely anticipated.
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Coverage Details
Total News Sources10
Leaning Left2Leaning Right1Center3Last UpdatedBias Distribution50% Center
Bias Distribution
- 50% of the sources are Center
50% Center
L 33%
C 50%
R 17%
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