Andy Burnham has hinted at introducing a lower 10p rate of tax for lower earners if he becomes Prime Minister, following Sir Keir Starmer's resignation on Monday. Mr Burnham now looks poised to take over in Number 10 Downing Street, turning attention to his potential policies and what a premiership could mean for UK households.
Income Tax Band Proposals
Income Tax is currently structured in bands: the Basic Rate is 20% on income up to £50,270, the Higher Rate is 40% on income up to £125,140, and the Additional Rate is 45% on income over £125,140. In September, Burnham told The Telegraph that the government should introduce a lower 10p starting rate of income tax, similar to the one Gordon Brown introduced as chancellor in 1999. That 10p rate was later abolished by Brown in 2008.
Wes Streeting's Wealth Tax Pledge
Mr Burnham's fellow Labour Party MP Wes Streeting has pledged a “wealth tax that works”, bringing capital gains tax (CGT) bands in line with income tax. Mr Streeting is expected to become Mr Burnham's chancellor. Helen Miller, director of the Institute for Fiscal Studies, said CGT is "in desperate need of reform" and noted "the devil will be in the detail" of Streeting's proposal. She added: "We should be wary of any proposals to 'reward genuine entrepreneurship, with lower CGT rates' – that approach has been tried and has failed because it's not possible to identify in advance who 'genuine entrepreneurs' are."
Expert Reactions
PKF Littlejohn's Adam Jefferies said: "This is not a wealth tax; it is an increase in the capital gains tax rate on non-business assets. It is also not a new idea." Tax Policy Associates founder Dan Neidle said Streeting has put forward a "good proposal". He went on to suggest half of the money raised could be used to cut the basic rate of income tax and described this as the "right thing at this moment". He wrote: "Spend the rest on e.g. defence. I think most people would agree."
