Sir Keir Starmer has hinted at the possibility of tax increases for stock and property owners as they do not meet his definition of a “working person”.
After Labour promised in its election-defining manifesto not to “raise taxes on working people”, the Chancellor was asked to share his definition of a “working person”, but it is not entirely clear who this would affect.
The debate over the definition intensified after ministers refused to rule out an increase in employer social security contributions in the Budget. Tax experts believe this would ultimately be passed on to employees and workers, for example in the form of lower wages.
Sir Keir said that in his view, a working person is someone who “goes out and earns a living, usually paid in the form of a monthly cheque”, but “does not have the ability to cut a cheque to finish their life”. Trouble”.
Beth Rigby whether he classified people who earn an income from assets such as stocks and property as working people, the Prime Minister said: “Well, they don’t fit my definition”.
Asked whether that meant their taxes would rise, the Prime Minister replied: You ask me to define what a working person is and then you guess what this tax refers to.”
Inheritance tax, which is levied on the estate of a person who deceased, and capital gains tax. Capital gains tax, which is levied on profits from the sale of capital assets, have been identified as the two taxes most likely to be increased.
Capital gains tax is currently levied on most personal possessions worth over £6,000, including second homes and most shares.
Chancellor of the Exchequer Rachel Reeves has not ruled out tax increases, saying in August: “We will have to take a lot of difficult decisions on spending, benefits and tax, but I will explain the details of those properly and appropriately.” The Budget is due to be set out on 30 October.
Sir Keir and Ms Reeves have repeatedly warned that “tough” decisions lie ahead in a budget that will address what they described as a £22 billion financial black hole left by the previous government.
People familiar with the budget say the Chancellor has identified a funding shortfall of £40 billion, more than double earlier estimates.
The Chancellor on Thursday rewrote the government’s budget rules in next week’s Budget to allow it to increase borrowing for public investment by around £50 billion.
The chancellor told UAE breaking News in Washington DC that the voluntary rules requiring borrowing to be reduced by the fifth year of the economic outlook would be redefined based on current net public sector debt.
She stressed that the change was necessary to deliver on Labour’s promise to end years of declines in public investment and deliver growth.
“The plan I inherited from the previous Conservative government was for net public sector investment as a share of the economy to fall sharply over the course of this term,” she said.
“I don’t want to go down this route for the UK because there are so many opportunities across a range of sectors, from life sciences to carbon capture and storage, from clean energy to AI and technology, plus we need to fix our failing schools and fix our hospitals.”