Andy Burnham has hinted at a new 50% HMRC income tax rate that could replace the current 45% higher rate paid on income over £125,140 a year. The Labour Party Prime Minister-in-waiting's proposal would see someone earning £150,000 pay around £1,250 more in income tax annually.
Expert Analysis on Tax Policy
Nimesh Shah of Blick Rothenburg commented: “Strictly speaking, introducing 50% income tax will break Labour’s manifesto promise, to not increase income tax, NIC or VAT. But let’s be honest, they have largely broken that promise by increasing employer’s NIC, increasing income tax on rental profits, savings interest and dividends, and extending the freeze on tax thresholds and allowances until 2031.”
Burnham's Economic Vision
Grant Thornton noted: "Burnham set out his approach to growing the economy and his commitment to the Government's fiscal rules. This focused on the central theme of devolution of power from London and Westminster and setting up a Number 10 of the North, with a 10 year ‘mission’ to improve living standards through three core tasks of reindustrialisation, reform of essential utilities, including housing, and regeneration of places."
Tax Policy Flexibility
On tax specifics, Grant Thornton added: "On tax policy specifically, beyond a passing mention of business rates reform to support pubs and the high street, the speech was silent. That is not surprising. Without a leadership contest forcing his hand, Burnham is likely to want to preserve as much flexibility on tax as possible, taking advice from officials and reserving firm decisions for a Budget later this year."
Implications for Taxpayers
Grant Thornton continued: "Faced with such uncertainty, there is unlikely to be one single right course of action in many cases. In certain instances, particularly where something is already in motion, it may be that accelerating this to ensure certainty of tax treatment is desirable. On the other hand, there may be scenarios where a wait-and-see approach or, ensuring there is flexibility to pivot in different directions, is more appropriate. Either way, understanding the options available early is important, as there may still be a window to act if needed."
