UK Workers May Face £450 Loss in Upcoming Budget

Millions of British workers could face a £450 hit to their pockets if the Prime Minister, Sir Keir Starmer, U-turns on his pledge not to raise taxes on working people, a move that is provoking deep concerns.

Labour's election manifesto explicitly stated a pledge not to increase “taxes for working people,” which included a freeze on Income Tax, VAT, and National Insurance.

However, after a recent exchange in the House of Commons, doubts have arisen regarding Starmer's adherence to this promise as the upcoming Budget, scheduled for October 30, approaches.

Budget Deficit and Taxation Concerns

Labour has consistently cited a £22 billion budget deficit that it claims has emerged within public finances, warning that “painful” adjustments may be necessary to address the shortfall.

During a parliamentary session, Rishi Sunak challenged Starmer, asking if the commitment not to raise taxes also applied to both employer and employee National Insurance contributions.

Starmer defended his party’s stance, stating, “We made an absolute commitment in relation to not raising tax on working people.” He emphasized the dire state of the economy and public services under previous tax policies, which he linked to the current financial challenges.

Recent Changes to National Insurance

In January 2024, the government reduced the National Insurance rate by two percentage points, dropping it from 12% to 10%. This adjustment benefitted a worker earning £35,000 with an average annual increase of £450, while those earning up to £100,000 saw gains capped at £754. Should Labour reverse this change, the average worker could lose that £450, with the maximum loss potentially reaching £745.

Further confirmation of any tax revision will be given on October 30 when Rachel Reeves is due to announce the Budget, leaving many workers anxious about the potential impact on their finances.