Prime Minister Sir Keir Starmer has sparked controversy by suggesting that landlords and shareholders do not fall under his definition of “working people” as Labour prepares for one of the biggest tax increases in recent history.
With Chancellor Rachel Reeves set to unveil her maiden Budget next week, the government is expected to target capital gains, inheritance tax, and employer contributions to retirement funds to raise an estimated £35 billion.
Speaking from the Commonwealth summit in Samoa, Starmer clarified that he considers “working people” to be those who “go out and earn their living, usually paid in a monthly cheque,” contrasting them with those who earn primarily from assets. Downing Street attempted to soften his remarks, explaining that Starmer was referring specifically to people whose primary income source is assets, not small-scale investors with modest savings.
Budget to impose record-high tax burden
Rachel Reeves’ upcoming Budget is expected to bring in the largest tax hike since 1993, pushing the UK’s tax burden to its highest level since records began in 1948. Reeves is reportedly focused on capital gains tax hikes and employer National Insurance contributions for retirement funds—measures that could impact landlords, shareholders, and employers with substantial contributions to employee pensions. These tax hikes are part of Labour’s strategy to address what they describe as a £22 billion fiscal deficit, “for real and not performative,” Starmer said.
Despite concerns that Labour’s approach could drive entrepreneurs out of the UK, Starmer pointed to last week’s successful investment summit as evidence that investors remain optimistic. He said that global investors are confident about Britain’s economic potential, in part due to the government’s proactive approach to fiscal management and structural reforms.
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