Andy Burnham has declined to rule out reintroducing the 50p additional rate of income tax as he considers how to fund tax cuts for pensioners and lower earners. Speaking to reporters after becoming Prime Minister, he said he was “looking at” raising the frozen personal allowance, but repeatedly failed to deny that restoring the top rate was under consideration.
Pressed on the issue, Mr Burnham said it would be “premature” to confirm any specific measure, though sources close to him suggest the Budget could be brought forward to as early as October. The move would risk breaking Labour’s 2024 manifesto commitment not to raise taxes on “working people”.
The 50p rate was introduced under Gordon Brown’s government in 2010 and cut to 45p by the Coalition in 2013. The Institute for Fiscal Studies estimates that reintroducing it would raise about £400m, though the figure is uncertain and would depend on how high earners respond.
Mr Burnham highlighted the freeze on income tax thresholds, in place since April 2022, as a “growing issue” for pensioners and low earners. The Office for Budget Responsibility forecasts that up to one million more pensioners could pay income tax by 2030–31 as the state pension rises under the triple lock and approaches the frozen personal allowance of £12,570.
He insisted that any changes would be made without taking risks with the economy and promised to stick to existing fiscal rules. Further cost-of-living measures are expected to be announced on Tuesday, with Mr Burnham saying the package would make a difference people could “feel quite quickly” this year.
