The chancellor said closing tax loopholes has enabled her not to raise income tax or national insurance.
In her Budget speech today (November 26), Rachel Reeves said she hopes reforms have made the UK tax system stronger.
She said: “The reforms I have made today will raise over £1bn per year by 2031.
“As a result of the tax reforms I have made today I can confirm I will not be increasing national insurance the basic, higher or additional rates of income tax or VAT.
“I have kept everyone’s contribution as low as possible through reforms to make our tax system stronger. Closing loopholes ensuring the wealthiest pay their share and building a tax system that is fairer for the future as our economy changes.”
The Budget also extended the freeze on income tax and secondary NICs thresholds until April 2031.
The freeze is extended beyond 2028-29, which will raise £8.6bn in 2029-30.
Simon Merchant, CEO of Flagstone said: “The big headline rumour that the Treasury would increase income tax by 2p never came to pass, a failure to raise income tax bands may prove just as detrimental to savers anyway.
“A failure to act on income tax bands is a stealth tax in (poor) disguise.
“Maintaining the same income tax bands for a fifth year means that more people than ever will be pushed into higher tax bands and pay more tax on their income.”
This view was echoed by Claire Exley, head of financial advice and guidance at JPMorgan Personal Investing.
She said: “While the headline news that income tax rates aren’t going up might be good news, some workers may get caught by the often talked about fiscal drag phenomenon.
“By extending the freeze on income tax thresholds, more workers may find that they are pulled into paying a higher rate of tax.”
tara.o’connor@ft.com
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tara.o’connor@ft.com
What’s your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
