The Bright Blue think tank has proposed a sweeping overhaul of the UK's income tax system, urging the government to increase the basic rate of income tax to 31 per cent for earnings under £50,270, up from the current 20 per cent. The right-leaning organisation also calls for the additional rate to be lifted to 52 per cent, alongside the abolition of employer National Insurance contributions.
Proposals to reshape tax bands
Under the plan, workers earning below £50,270 would see their basic rate rise from 20p to 31p in the pound, while higher earners would face a top rate of 52p, replacing the existing 45 per cent additional rate. The think tank argues that scrapping employer National Insurance would simplify the tax system and shift the burden onto employees, making tax more transparent.
Bright Blue's recommendations come as the government faces pressure to address fiscal challenges. The proposals would affect most income sources, including employment, self-employment, pensions, investments, and property rental, though certain savings products and many state benefits remain exempt.
Political reaction and criticism
Kevin Hollinrake, chairman of the Conservative Party, criticised the plan, stating that risk-takers and founders should not be "loaded" with higher taxes to "fund a bigger safety net". His comments highlight the political divide over tax policy, with the Conservatives positioning themselves against higher taxation.
The think tank's report also notes that the personal allowance is gradually withdrawn for incomes above £100,000, creating an effective 60 per cent tax rate on earnings between £100,000 and £125,140. Similarly, families receiving child benefit see it withdrawn when the highest-income parent earns over £50,000.
Broader tax context
Bright Blue's proposals follow the release of government documents revealing that HMRC could force self-employed workers and landlords to pay tax monthly on income not yet earned. This has raised concerns about cash flow for those affected.
Individuals can deduct private pension contributions or charitable donations from their income for tax purposes. Those earning below the personal allowance can transfer 10 per cent of the full allowance (rounded to the nearest £10) to a spouse or civil partner who is a basic-rate taxpayer.
Treasury response
A Treasury spokesman said: "The Chancellor is fully focused on his priorities, which will boost business, help with the cost of living and support people in every postcode. As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals."
The spokesman's comments indicate that no immediate action will be taken on Bright Blue's suggestions, with fiscal decisions reserved for official announcements. The proposals are likely to fuel debate ahead of the next budget, as the government balances economic growth with public spending needs.
