The UK government is likely to break its promise not to raise income tax, VAT, or National Insurance at the upcoming Autumn Budget. An increase in income tax of 2p per pound is being considered, the first in 50 years due to economic challenges like high inflation, low growth, and increased borrowing costs.

Experts suggest that basic-rate taxpayers may be spared a tax increase to avoid targeting lower-income voters. However, raising taxes on higher earners could still breach the original manifesto promise. Other tax reforms being considered include changes to National Insurance relief, pension tax relief, capital gains tax, council tax, and more.

The Labour Party’s stance on taxes has shifted, with the need for tax increases becoming more apparent to meet fiscal rules by 2029/30. The Institute for Fiscal Studies estimates a significant fiscal adjustment is required to achieve a balanced budget or surplus, with potential downgrades to borrowing outlooks and the need for substantial intervention.

Read more at Morningstar: Will Rachel Reeves Raise Income Tax at the Autumn Budget?