Tax  

Labour pledges tax hike for £80k earners

Labour pledges tax hike for £80k earners

The Labour Party plans to hit earners with incomes of more than £80,000 with additional tax arguing this would be a “fairer tax system” for Britain.

The party’s manifesto — published today (November 21) — proposed those who earn more than £80,000 a year would pay “a little more income tax” while the National Insurance levy and lower income tax rates would be frozen.

On top of this a new "super-rich" tax rate will be payable by those who earn more than £125,000.

Currently those on £80,000 are taxed at the higher rate tax band, which spans from £50,001 to £150,000.

Labour’s policies would see this band split, with those over £80,000 experiencing a higher rate and those over £125,000 levied an even higher rate. There is no detail as to what the new rates would be.

According to shadow chancellor John McDonnell the move would raise £5.4bn by the tax year 2023/24.

The party also pledged to “end the unfairness” that income from wealth is taxed at lower rates than income from work by taxing income from capital gains and dividends at income tax rates.

Other tax policies in the party’s plans included no increases on VAT and the “biggest ever” crackdown on tax avoidance and evasion, alongside a reversal of the Tories’ cuts to corporation tax.

Labour stated it would raise the tax to 21 per cent for small profits and 26 per cent for the main rate. Corporation tax is currently at 19 per cent.

The manifesto also includes plans to review the tapered annual allowance, which has caused problems for NHS staff.

It emerged in December that the number of members leaving the NHS Pension Scheme was five times higher than that seen by other public pension funds, most likely because of the taper on the annual allowance.

Introduced in 2016, the tapered annual allowance gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.

The manifesto stated: “A Labour government will review the tax and pension changes implemented by the Tory government to ensure that the workforce is fairly rewarded and that services are not adversely affected.”

Further pensions policies also included a pledge to work with Waspi women — women born in the 1950s who were the first to be affected by a sharp rise in the state pension age — to design a system of recompense for the “losses and insecurity” they had suffered.

The party promised they would legislated to ensure the situation didn’t happen again by preventing accrued rights to the state pensions from being changed.

On top of this, the party pledged not to raise the state pension age again and leave it at 66.

The Labour Party pledged to tackle the social care crisis by launched a “comprehensive National Care Service”, which would work alongside the NHS and introduce a cap of £100,000 for care costs.