Higher earners have been warned to be "wary" ahead of the Labour government's first Budget, scheduled for October 28, with pensions experts AJ Bell suggesting that Chancellor John Healey could cut the additional rate tax threshold again.
Prime Minister Andy Burnham and Chancellor John Healey will deliver the fiscal statement on October 28. According to AJ Bell, two groups are likely to bear the "brunt" of tax changes: Henrys (High Earners, Not Rich Yet) and Heros (High Earners, Rich and Older). These groups may be concerned about rumours of a wealth tax, as well as further dividend tax and capital gains tax changes.
Threshold cut could bring more into 45% tax
AJ Bell warned: "Chancellor Healey could move the additional rate tax threshold. It was cut from £150,000 to £125,140 in April 2023, and remains frozen."
This year, 1.3 million people are set to pay the 45% additional rate – more than double 2021/22 levels, according to HMRC data. AJ Bell noted: "It has already raised significant sums, so Healey might choose to cut the threshold again, bringing another group of people into paying 45% tax."
Possible 50p rate and other proposals
The warning from the pensions experts continues: "Alternatively, Burnham has previously suggested reintroducing the 50p rate of tax."
There are other voices calling for higher taxes for higher earners, with think tank Bright Blue suggesting a top rate of 52%. When campaigning for election, Burnham refused to be drawn on the issue, but higher earners may well be worried.
Chancellor confirms Budget date
Confirming the date of his Budget previously, Mr Healey MP said: "This government is working fast to restore hope and back Britain’s communities."
"In the past two weeks, we have begun to kickstart growth in every postcode. We have backed British jobs, British skills and British businesses."
"And we have provided just a bit of breathing-space for those families and businesses that feel so squeezed, that feel without hope."
"Today, I’m confirming the date of my first Budget as Chancellor will be Wednesday 28th October."
"This will be a Budget that moves money and power out of Westminster, and into every postcode around Britain."
