What is the Labour Party's definition of 'working people' as outlined in the Autumn Budget?
In the upcoming UK Budget, the term "working person" often refers to those who earn their income through employment and pay taxes such as Income Tax and National Insurance Contributions (NICs). This term typically excludes wealthier individuals who derive income from capital or property rather than salaried work.
Keir Starmer, the Prime Minister, has pledged not to increase Income Tax, employee NICs, and VAT for working people. However, Starmer is struggling to define who constitutes a "working person." He has recently stated that those whose sole income derives from assets, such as shares or property, will not be included in his definition.
This shift in definition may potentially impact the self-employed, as Starmer's focus has moved to "protecting the payslips of working people."
The National Residential Landlords Association (NRLA) has highlighted data showing that 30% of landlords are employed full-time, with a further 10% working part-time. Another 28% are self-employed, while 35% are retired and rely on rental income for their pension. Ben Beadle, the chief executive of the NRLA, urges the government to focus on the lack of homes to rent to meet ever-growing demand, rather than stoking misconceptions about landlords.
The Budget is scheduled for this week, and the Chancellor, Rachel Reeves, has stated that tax rises are necessary to fill spending gaps left by the Tories. She has not ruled out increases in employer NICs, which could impact businesses as employers must pay NICs on their workforce's earnings beyond a certain threshold. While employees directly pay employee NICs, rises in employer NICs can lead to increased costs for companies and potentially affect employment conditions or wage growth indirectly.
Holly Mackay, the founder of investment comparison website Boring Money, warns it is unfair to suggest that working people don't own shares or property. She highlights that over the past five years, the number of DIY investment accounts in the UK has increased from 5.2 million to 10.6 million. Around one in three adults today own some sort of investment product, not including a workplace pension, according to Mackay.
Capital gains tax and inheritance tax are rumored to be candidates for reform. CGT rises would primarily affect individuals who realize gains from selling assets such as property (not their main home), shares, or investments. These are often wealthier individuals or property owners rather than typical "working people" who earn income mainly from salaries.
Increases in inheritance tax would impact those passing on estates or wealth at death. Typically, this affects wealthier individuals with significant assets, rather than ordinary salaried workers. The tax focuses on accumulated wealth rather than income from work.
Thus, while "working people" (employees earning wages) are generally shielded from tax rises on Income Tax and employee NICs, tax increases may be targeted at employers through employer NICs and at wealthier individuals through capital gains and inheritance tax. This approach aligns with Labour’s manifesto commitments not to raise direct taxes on working people's earnings but to explore other revenue sources such as wealth taxes or employer contributions to meet budgetary needs.
- Given the upcoming UK Budget, the term "working person" may not apply to those who earn income from capital or property, as opposed to salaried work, a point recently emphasized by Keir Starmer.
- The National Residential Landlords Association (NRLA) has brought attention to the fact that a considerable number of landlords are self-employed, which could potentially be affected by Starmer's focus on "protecting the payslips of working people."
- The Chancellor, Rachel Reeves, has stated that tax rises are necessary to cover spending gaps left by the Tories, and while she has not ruled out increases in employer NICs, these could impact businesses and potentially affect employment conditions or wage growth indirectly.
- Holly Mackay warns that it is unfair to suggest that working people do not own shares or property, as the number of DIY investment accounts in the UK has grown significantly over the past five years.
- While tax rises on Income Tax and employee NICs are unlikely for "working people", wealthier individuals may face increases in capital gains tax and inheritance tax, which primarily affect those with significant assets or property.
