Raise income tax by 2p and cut national insurance, Reeves told

Rachel Reeves has been urged to take 2p off the rate of employee national insurance and add it to income tax in the budget, to raise billions of pounds while protecting workers' pay packets.

- Richard Partington

Putting forward plans to raise up to £30bn, the Resolution Foundation called on the chancellor to “level the playing field” on how different forms of income are taxed. The influential thinktank, which has close ties to the Labour ministers leading the budget preparations, urged Reeves to consider a package of measures to reshape the tax system.

It said £6bn a year could be raised through a policy to cut employee national insurance by 2p, with a corresponding increase for all income tax bands. This is because income tax applies to a wider group of taxpayers than employee national insurance - including pensioners, landlords and the self-employed. Income tax is devolved in Scotland and Wales but the thinktank said it would expect the respective governments to follow the approach taken in England and Northern Ireland.