TL;DR – Budget 2025 latest
- Rachel Reeves is expected to avoid raising income tax and national insurance rates to uphold commitments to “working people” defined as those earning £45,000 or less.
- The budget faces a potential black hole of up to £40bn, exacerbated by worse-than-expected economic forecasts by the Office for Budget Responsibility.
- Ministers are deliberating on whether to break manifesto pledges, with a need to find around £10bn due to policy changes and welfare adjustments.
Income tax and national insurance unlikely to rise – as leaked document obtains definition of ‘working people’ | Politics News
Rachel Reeves is unlikely to raise the basic rates of income tax and national insurance in order to avoid breaking a promise to protect “working people” in the budget.
It comes as a leak of an internal document has shown an internal definition of “working people” used by the Treasury.
Officials have been tasked with protecting the income of the lower two-thirds of working people, meaning in theory people earning more than around £46,000 could face a squeeze in the budget.
However, this is likely to rule out increases to the basic rate of income tax and national insurance, since they would pay more tax.
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Rachel Reeves is unlikely to hike these taxes because the Treasury says those earning £45,000 or less qualify as “working people”.
WTX UK News understands that ministers are still considering whether to break manifesto pledges, and these options remain on the table.
The main elements of the budget must be finalised by the middle of November, in the next two to three weeks.