Andy Burnham, the Labour Party MP for Makerfield and widely anticipated next Prime Minister, has ruled out increases to income tax, VAT, or employee national insurance contributions if he takes office. However, he has hinted at other tax changes that could significantly affect middle England, including a possible reintroduction of the 50p top rate of tax and reforms to inheritance tax.
Burnham's Tax Pledge: Rates 'Will Stay'
In an interview with The Times, Burnham stated that the current rates for income tax, VAT, and employee national insurance “will stay” under his leadership. This commitment aims to reassure taxpayers, but experts warn that other adjustments could still increase the tax burden.
Inheritance Tax and Care Levy on the Table
MoneyWeek reports that inheritance tax changes “could also be a possibility.” As health secretary in 2009, Burnham proposed a flat 10% charge on all estates to fund social care. More recently, he has floated replacing inheritance tax with a new “care levy” to fund the NHS. The Sun describes this as a move that will “terrify middle England,” effectively “plundering the assets of families who have worked hard all their lives.”
Reintroduction of 50p Top Rate
Burnham has also suggested reintroducing the “hated” 50p top rate of tax, according to The Sun. This would affect higher earners and could be part of a broader strategy to address fiscal imbalances.
Other Proposed Changes
Burnham has hinted at rethinking inheritance tax rules for farmers and cutting business rates for pubs by 20%. These measures aim to support specific sectors while generating revenue from other sources.
Impact of Frozen Thresholds and Allowances
Rathbones, a wealth management firm, commented: “Income tax rates are unlikely to rise, but changes to thresholds and allowances could still increase the amount you pay – even if the headline rate stays the same.” The firm noted that frozen thresholds and adjusted allowances can increase tax bills over time, a phenomenon known as “fiscal drag.”
Burnham has acknowledged concerns about the frozen personal allowance and proposed a review. Rathbones added: “If it does happen, it could reduce the effects of fiscal drag, where rising pensions and salaries push more people into higher tax bands, meaning they’ll pay more income tax even though tax rates haven’t changed. This would help ease the tax burden for many people.”
