With the Budget just days away, Labour’s stance on “working people” has raised concerns, especially among business owners. In recent statements, Prime Minister Keir Starmer clarified that “working people” receive a monthly pay cheque, specifically excluding asset owners, landlords and shareholders. This definition has sparked a backlash from small business owners who worry it could signal tax increases for asset-rich individuals.

Starmer’s “absolute commitment” to freeze income tax, national insurance and VAT applies only to those under this “working people” umbrella, excluding anyone with significant asset holdings. The definition leaves room for the Chancellor, Rachel Reeves, to target tax hikes on asset-rich taxpayers, including business owners and landlords.

There is growing speculation that Reeves will increase employers’ national insurance (NICs), which could generate £8.5bn from a 1% rise and be implemented relatively quickly across all employers. However, some argue a more targeted approach, such as applying NICs to pension contributions, would avoid hitting all employers but would be more complex and slower to roll out.

With Labour’s manifesto pledging tax protection for “working people”, the Chancellor’s upcoming announcements will be crucial in balancing revenue needs while addressing the concerns of those outside Labour’s definition of “working people”.

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