Chancellor Rachel Reeves Considers Income Tax Hike, Breaking Labour Manifesto Pledge Amid £30bn Deficit

Chancellor Rachel Reeves is considering raising income tax to address a significant £30 billion deficit in the UK’s public finances, a move that would break Labour’s key manifesto pledge not to increase taxes on working people. The potential measures include adding 1p to the basic income tax rate, which could raise over £8 billion, or increasing higher and additional rates, though these would yield smaller amounts. Despite concerns about the political fallout, especially following last year's national insurance increase, Treasury insiders suggest that raising income tax might be necessary to prevent further tax hikes during this parliament. Other tax options, like VAT or corporation tax increases, are seen as more damaging, making income tax the 'least damaging' choice. Reeves emphasizes fairness, advocating that those with the broadest shoulders should pay more, but the decision remains contentious amid fears of burdening working families amid cost-of-living pressures. The Chancellor faces a challenging budget with about 100 measures under review ahead of the November 26 budget announcement.