Why lowering tax thresholds will cost workers more than an income tax rise

Lowering the income tax thresholds would cost most workers more than a previously mooted “two-up two-down” plan to raise income tax rates while cutting national insurance, according to economists.

Rachel Reeves considered a Budget proposal known as “two up, two down”, which would have seen the Treasury increase the rate of income tax by 2p and reduce employees’ national insurance contributions by the same amount.

She has now definitively decided against raising income tax , which would have been a breach of a promise in Labour’s general election manifesto. The change of heart came after a pick-up in the public finances meaning that the Chancellor needs to raise less revenue than previously thought. New Feature

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The Financial Time