Angela Rayner is pushing the Chancellor to increase taxes on savers and high earners, it emerged today.
Exposing deep splits in Keir Starmer‘s Cabinet, the Deputy Prime Minister wrote to Rachel Reeves proposing eight tax hikes.
They included reinstating the pensions lifetime allowance, changes to dividend taxes, a raid on a million people who pay additional rate income tax and a higher corporation tax level for banks.
The proposals, contained in a secret memo seen by The Telegraph, would raise taxes by between £3billion and £4billion a year, according to estimates in the document.
But the true figure is likely to be higher as not all the measures were costed. Allies of Ms Rayner said she has become exasperated with having to defend spending cuts.
On Tuesday, a source close to the Deputy PM declined to comment on the memo, but said it was not unusual for discussion papers to be commissioned at official level.
However, the Chancellor is said to be making clear that it is she who decides taxation and spending policy.
The memo, marked ‘official’, was submitted to the Chancellor’s team in mid-March.
Angela Rayner is pushing the Chancellor to increase taxes on savers and high earners, it emerged today, in a move which has exposed deep splits within the Labour Party’s top ranks
The Chancellor is said to be making clear that it is she who decides taxation and spending policy rather than Ms Rayner
It was titled ‘alternative proposals for raising revenue’ and stated the policies ‘would be popular, prudent and would not raise taxes on working people’.
It suggested ways to increase taxes on the wealthy, including reinstating the pensions lifetime allowance – a £1million cap on how much could be saved in a pension without incurring higher tax charges.
Ms Rayner’s memo also suggested freezing the threshold at which the additional rate of income tax kicks in. It is fixed at £125,140 until April 2028, but she recommended continuing the freeze – dragging more people into the top tax band over time.
She also proposed ending inheritance tax relief on shares for the so-called Alternative Investment Market.
Shadow Chancellor Mel Stride said: ‘The Chancellor has repeatedly refused to rule out another tax raid in the autumn and now we know why – Labour’s top brass want to come back for more.’
Ms Reeves, meanwhile, is still determined to cut the annual cash Isa allowance in October’s Budget despite ‘mistaken’ reports she had rowed back on the idea.
Adults can save or invest up to £20,000 a year in a tax-free Isa (individual savings account). But Ms Reeves is considering how savers can be encouraged to buy investment Isas by reducing the cash allowance to £4,000.
In a BBC interview yesterday, she said she was ‘not going to reduce the limit of what people can put into an Isa’, later interpreted as saying she had backed down.
Within hours, a Treasury official told the Mail the Chancellor’s comments had related to the ‘annual [Isa] limit, not [the] cash limit’.
