Landlords and shareholders face being hit with tax rises at next week’s budget after Sir Keir Starmer suggested they are not ‘working people’. The Prime Minister said that anyone whose income comes from assets such as shares or property would not come under his definition of a working person.
Sir Keir has been under pressure to set out what a ‘working person’ is after he pledged not to increase their taxes in his manifesto. He has already ruled out putting up rates of income tax, employee National Insurance and VAT, raising questions of how the government will fill the £22billion ($28bn) ‘black hole’ left by the Tories.
Speaking to Sky News on Thursday night, Sir Keir said a working person is somebody who ‘goes out and earns their living, usually paid in a sort of monthly cheque’ but they did not have the ability to ‘write a cheque to get out of difficulties’. And when asked if this would include people who get all or part of their income from assets, he said: ‘Well, they wouldn’t come within my definition.’
Sir Keir’s comments come amid widespread expectation that Chancellor Rachel Reeves will increase capital gains tax on profits from the selling of shares. She is also understood to be planning to impose national insurance on employers’ contributions to retirement funds – despite complaints it is a ‘straightforward breach’ of Labour’s manifesto.
Ms Reeves said in August: ‘On spending, on welfare, and tax, we’re going to have to make a series of difficult decisions, but I’ll set out that detail in the right and proper way on the 30 October at that budget.’ The rumoured £35billion ($45bn) of tax increases in the package would be the most raised at a Budget since 1993.
However, Sir Keir has insisted there is ‘no reason’ for entrepreneurs to leave the country. He told reporters: ‘My evidence that what we are saying is attractive to investors is last Monday’s investment summit that was hugely successful. All the feedback back to us has been that it was very well received by a significant number of global investors.’
Sir Keir insisted people were investing in Britain ‘because of what this government is bringing to the table’. Downing Street later said investors ‘shouldn’t be worried about this Budget’, despite some rushing to sell assets due to expected hikes in capital gains tax.
Sir Keir has said the Budget will aim to ‘fix the foundations’ and ‘rebuild’ the country as he insisted that the ‘£22billion ($28bn) black hole’ is ‘for real’ and not ‘performative’. ‘It’s for real and we’ve got to deal with it and I don’t think we are wrong to be honest about that and we have also been clear this is a budget about rebuilding the country and therefore it will also spell out the direction of travel for the country and what we want to do with it. We’ve got to get both bits of that right.’
The PM said he was ‘not prepared’ to put off the pain for another year, telling reporters that while there would be more budgets to come, he wanted to ‘tackle the inheritance in this Budget’. ‘I’m not prepared to walk past it. I’m not prepared to put it off and that is a signal of the way I want to do business which is not to pretend our problems aren’t there, it’s to actually roll up our sleeves and deal with it.’
