This is Money Podcast Will Rachel Reeves dare to hike income tax?
25 snips
Oct 31, 2025 The discussion heats up around the potential income tax hike that Rachel Reeves is considering, scrutinizing its political and financial ramifications. Mansion tax speculation surfaces again, raising questions about feasibility and valuation challenges. Good news follows as Goldman Sachs hints at possible interest rate cuts, influenced by sluggish growth. Energy standing charges have skyrocketed, with the team delving into their surprising escalation. They also tackle shrinkflation, revealing how beloved chocolate biscuits are losing their cocoa content.
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Income Tax Is The Big Revenue Lever
- Income tax is the UK's largest revenue source and a 1p rise across rates would raise ~£10.9bn while 2p would double that.
- Raising only the basic rate or thresholds won't plug the OBR-driven £22bn fiscal gap effectively.
Offset Income Tax With NI Cuts
- Consider a 2p income tax rise offset by a 2p cut to National Insurance to make the move neutral for many earners.
- Note this shifts the burden to pensioners and landlords who don't pay NI, so assess distributional effects.
Fiscal Drag Does Much Of The Work
- Freezing personal allowance and thresholds creates 'fiscal drag', pushing people into higher tax bands over time.
- Extending freezes is an easy way for the government to raise revenue without headline rate changes.
