Chancellor Rachel Reeves has firmly ruled out any changes to HMRC income tax rates for the duration of her tenure as Labour Party Chancellor, providing reassurance to millions of taxpayers earning above the £12,570 threshold.
Reeves Reassures Taxpayers on Income Tax Rates
In March, Reeves instructed Treasury officials to "set out plans to give regional leaders control of a share of some national taxes which have, for too long, been allocated by central government." However, she moved quickly to allay fears, stating: "This is not about new taxes and it’s not about higher tax rates – I will not ask taxpayers to pay more."
Currently, workers in England, Wales, and Northern Ireland face a 20% income tax rate on earnings above £12,570 per year. This rises to 40% on income over £50,270, and 45% on earnings above £125,140.
Devolution Plans Spark Debate
The announcement comes amid speculation that Greater Manchester Mayor Andy Burnham could become Prime Minister following Sir Keir Starmer's resignation. Lord O'Neill, former minister and Goldman Sachs chief economist who has been advising Burnham, told LBC: "The one thing, if it is going to be Andy, that for sure we will get is devolution on a much more ambitious scale." He added: "It is definitely something that would be on the agenda to study in a serious way."
However, Shadow Chancellor Sir Mel Stride warned that devolving income tax rates to regions could lead to higher taxes for working people. "Devolving income tax rates to the regions risks opening the door to tax rises on working people," the Conservative MP said. He accused Reeves of already introducing a "holiday tax under the guise of fiscal devolution" and cautioned: "If Andy Burnham now wants to look at income tax as well, working families across the country should brace themselves for yet more taxes."
