Reeves Screeches Into Reverse With Panicked Tax U-Turn

Reeves Screeches Into Reverse With Panicked Tax U-Turn To Save Face

 

 

In a dramatic late-stage wobble, Sir Keir Starmer and Chancellor Rachel Reeves have reportedly abandoned their flagship — and manifesto-breaking — plan to hike income tax, capitulating just days before the Nov 26 Budget amid rising panic inside Downing Street.

 

The Financial Times revealed that the pair quietly told the OBR on Wednesday afternoon that the income-tax rise was dead. Instead, Reeves is scrambling for alternatives: cutting thresholds, extending frozen tax bands, and cobbling together a “smorgasbord” of bite-sized revenue-raisers to paper over a £30bn hole in the public finances.

 

Conservative leader Kemi Badenoch welcomed the climbdown as “good (if true)” but mocked Labour for trying to dodge responsibility for its “broken promises.” She demanded Reeves rule out any new taxes on work, business, property or pensions — and even scrap stamp duty outright.

 

The U-turn comes just days after Reeves junked plans for a controversial “exit tax” on wealthy emigrants, terrified that millionaires would flee en masse before the levy took effect. Reeves had hoped the measure would raise £2bn, but warnings from Britain’s biggest founders and investors — 150 of whom wrote to her last week — spooked the Treasury into retreat.

 

Concerns are already mounting about a broader exodus of high-net-worth individuals, driven by Labour’s crackdown on non-doms and inheritance tax changes. One advisory firm predicts 16,500 millionaires will quit Britain in 2025 — far above last year’s total — with the UAE and Switzerland the biggest winners.

 

Left-wing Labour MPs are now furious, accusing Reeves of protecting the rich while planning stealth tax rises that will clobber ordinary workers instead. But Treasury insiders insist the Government is “pro-business” and cannot afford to signal hostility to global talent.

 

With polls collapsing, internal rebellions brewing, and the Budget days away, Starmer and Reeves have performed yet another screeching U-turn — this time to avoid detonating their own manifesto.

 

Key Takeaways

• Reeves abandons income-tax rise and scraps “exit tax” after warnings of millionaire flight.

• Labour now eyeing threshold freezes and smaller measures to plug a £30bn fiscal gap.

• Concerns grow over a mass exodus of wealthy individuals fleeing Labour’s tax regime.

 

Source: EXPRESS