Reeves Plans Tax Threshold Freeze Amid £40B Gap

Chancellor Rachel Reeves is set to propose an extension of the freeze on income tax thresholds beyond 2028 in the upcoming budget, a move that could raise £7 billion annually. This decision is seen as a 'stealth tax' as it would push more people into higher tax brackets due to inflation. Labour's manifesto pledged not to raise income tax rates, but the freeze exploits 'fiscal drag' without technically increasing rates, leading to criticism about breaking promises. Additionally, Reeves is expected to introduce hikes in inheritance tax, fuel duty, and possibly capital gains tax to address a £40 billion fiscal shortfall. The opposition has criticized these measures as a betrayal of Labour's commitment to not increasing taxes on working people, although Labour maintains that these actions do not violate their manifesto commitments.