Is our wealth under attack from Reeves' stealth levies?

LAST week, Rachel Reeves promised not to hike income tax, National Insurance or VAT, but hard-pressed taxpayers shouldn't relax just yet.

- By Harvey Jones

With the public finances under pressure, she may have to target other levies instead.

She has tied herself in knots. She will struggle to cut spending after the winter fuel payment and disability benefits backlash, but refuses to bend on her fiscal rules.

These commit her to cutting Britain's debt and only borrowing to fund investment, and she calls these “cast-iron” and “non-negotiable”.

That leaves the Chancellor with just one option: raise taxes by stealth.

Experts say there are plenty of places she could look.

SNEAKY

Jason Hollands, managing director at wealth firm Evelyn Partners, said one option is to extend the freeze on income tax thresholds, which is set to run until 2028. “It’s already drawing millions into HMRC’s tax net by stealth as wages rise.”

The freeze is already set to raise £38billion and extending it to 2030 could bring in another £10billion, and Hollands thinks this is the most likely option. “People would not see an immediate effect and it wouldn't technically breach the pledge to increase tax rates.”

Alternatively, she could lower the point at which the additional rate 45% income tax rate kicks in, from £125,140 to £100,000.

That wouldn’t breach Labour's wording either, but would raise billions from higher earners.

LEGACY