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 those who earn extra income from property and investments are not covered by Labour’s manifesto pledge to protect “working people” from paying more.
His remarks on the sidelines of the Commonwealth heads of government summit in Samoa will heighten fears that he and Rachel Reeves, the Chancellor, are set to come after Britons with assets at Labour’s first budget next Wednesday.
Labour’s manifesto ruled out putting up rates of income tax, employee National Insurance or VAT and said that “working people” would not pay more tax.
But there has been growing uncertainty over how No 10 defines the term, and at which point a person’s wealth means they are not covered by the manifesto pledge.
Sir Keir was asked whether “someone who works but gets their income from assets as well such as shares and property” was a working person. He told Sky News: “Well, they wouldn’t come within my definition. I think people watching this will know whether they’re in that group or not.”
The Prime Minister said his definition covered “those people who work hard and are anxious about whether they can make ends meet, and know that should something happen to them and their family they can’t write a cheque to get out of the problem”.
Before the election, he had suggested he did not consider those who have substantial enough savings to fall back on in hard times to be working people.
His remarks come amid widespread expectation that Ms Reeves will use the Budget to increase capital gains tax on profits from the sale of shares. Landlords will face record stamp duty bills next year if the Chancellor goes ahead with unwinding property tax breaks introduced by the Tories.
Cabinet ministers have also suggested that anyone who earns more than £100,000 a year is not considered a working person, and so is not covered by the guarantee.
Ms Reeves is poised to announce sweeping tax rises next Wednesday as she seeks to plug what she says is a £22 billion “black hole” left by the Tories. The Chancellor will need to show the markets she is serious about raising revenue after announcing that she is loosening debt rules to borrow an extra £60 billion a year.
