Rachel Reeves admits some working people face tax rises at Budget

US Fed chairman Jerome Powell, left, speaks with Rachel Reeves at the World Bank/IMF Annual Meetings in Washington, DC, this afternoon. Reeves praised America's "hard-headed, economic realist position" over trade with China during an interview with Reuters
US Fed chairman Jerome Powell, left, speaks with Rachel Reeves at the World Bank/IMF Annual Meetings in Washington, DC, this afternoon - AP Photo/Jose Luis Magana

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Rachel Reeves has admitted that some working people will face tax rises at her maiden Budget next week, committing only to not raising “key” levies on workers.

The Chancellor also suggested that the Prime Minister is a “working person” after Sir Keir Starmer suggested landlords and anyone earning their income from assets are not workers.

Responding to a question on LBC Radio on whether some working people faced tax rises, the Chancellor said: “It’s not possible to close the gap in our public finances without having to make difficult decisions.

“I’m making the choice to not increase the key taxes that working people pay.”

Ms Reeves denied this would be in breach of Labour’s manifesto pledge not to raise taxes on workers.

She said: “We made a clear commitment in our manifesto not to increase the key taxes that working people pay, National Insurance, income tax and VAT.”

Ms Reeves’ remarks come after James Murray, the Exchequer Secretary to the Treasury, was pressed several times on the definition of a working person but was unable to say whether it included landlords.

The comments suggest that taxes on capital gains from selling assets like shares and rental properties will increase at the Budget on Oct 30.

When asked if Sir Keir met the definition for being a working person, Ms Reeves said: “The Prime Minister gets his income from going out to work, working for our country. He is a working person.”

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Think tank says axing CGT would raise growth

As Britain braces for tax hikes, a free-market think tank linked to former chancellor Nadhim Zahawi has urged a cut.

A report from the Adam Smith Institute says that capital gains tax damages revenue and economic growth. The author, Peter Young, said:

Historical evidence shows that reductions in CGT rates lead to increased tax revenues as investors are more likely to realise gains. For instance, when Ireland halved its CGT rate in 1997, revenues doubled within two years.

Maxwell Marlow, director of research at the Adam Smith Institute, said: