Labour's tax promises explained

There’s been a lot of chatter lately about potential tax hikes. With rising living costs, many workers were understandably anxious.

Thankfully, Chancellor Rachel Reeves confirmed in her budget that income tax, national insurance and VAT will remain unchanged for employees.

This news will come as a welcome relief to many – but what does it mean for you?

No increase in taxes

• You’ll still get the same amount of pay.
• You can keep spending as you do now, without stressing about extra cuts to your budget.
• Prices won’t rise due to higher VAT.

National insurance

It's important to mention while there's a rise in national insurance, this only affects employers, not workers.

This means:

• Your contributions to national insurance won't go up.
• Your benefits and access to services remain unchanged.
• Employers may have to adjust their budgets, but your paycheck will stay the same.

The biggest changes for employers will be:

• a 15% contribution (up from 13.8%)
• a lower earnings threshold of £5,000 from £9,100

Smaller businesses will benefit from a higher employment allowance of £10,500 – up from £5,000.

Why has Labour not raised these taxes?

Labour has promised to put ‘more pounds in people’s pockets’ and taxing working people wouldn’t do this.

Instead, they’ve chosen to raise £25bn by raising employers’ national insurance contributions and reduce the threshold.

Other measures to plug the ‘£22bn black hole’ in the public purse they say they inherited from the previous Conservative government include:

• increasing capital gains tax
• reforming business relief rates
• taxes on vapes and tobacco
• VAT for private school fees
• scrapping non-dom status – and the associated tax break that comes with it

Labour says their budget will raise £40bn to help rebuild public services, including generous spending increases for the NHS and schools.