Martin Lewis issues Income Tax warning over Rachel Reeves plans | Personal Finance | Finance

Martin Lewis has issued a tax warning after Rachel Reeves delivered a speech laying the groundwork for her upcoming November Budget on Tuesday morning. Money Saving Expert Founder took to Twitter today to analyse what he thinks the Chancellor is most likely to do on November 26 when she sets her annual spending plans in the Autumn Budget, following a speech today in which she told the UK, “each of us must do our bit”.

Martin told his followers that her speech “had a few clues in it” by the phrases that were “repeated” throughout. He then went on to ‘unpick’ the outline from Ms Reeves and warned that tax rises are likely, pointing to a cut in VAT on energy bills as well as raising taxes or even “breaking a manifesto pledge” with an income tax hike.

Martin posted: “1. Cut NHS waiting lists… probably will be the reason used for raising taxes or even breaking manifesto pledge and increasing income tax.

“2. Cut the National debt (or in reality reduce deficit)… likely a push to labour colleagues not to expect the country’s purse strings to untie

“3. Cut the cost of living… there will be a retail giveaway in budget eg ending VAT on energy bills.

“4. The productivity push likely means an announcement of investment in infrastructure (which is outside the fiscal rules)

“5. The OBR comment is all to say that the obr isnt the law on what the future brings and give wriggle room for decisions that may not follow it’s forecasts (ie we believe we will make things more productive than OBR has said based in the past so we can do more now).”

The Chancellor declined to recommit to Labour’s manifesto commitments not to raise income tax, national insurance or VAT, saying “we will all have to contribute”.

She blamed global problems, including the tariff war triggered by US President Donald Trump, and domestic issues, including the budget watchdog’s expected downgrade of economic productivity, for the “hard choices” she will make.

Ms Reeves took the unusual step of delivering a speech three weeks ahead of her Budget to prepare the ground for the expected tax increases she will announce.

Speaking in Downing Street, she said: “As I take my decisions on both tax and spend, I will do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity and to ensure that the economy that we hand down to future generations is secure with debt under control.

“If we are to build the future of Britain together, we will all have to contribute to that effort.

“Each of us must do our bit for the security of our country and the brightness of its future.”

Ms Reeves repeatedly declined to confirm she will stick to the manifesto commitment, telling reporters: “We’ve got to do the right things. The problem of the last 14 years is that political expediency always came above the national interest, and that is why we are in the mess that we are in today.”

She said she had been appointed Chancellor “not to always do what is popular, but to do what is right”.

That would mean a focus on “cutting NHS waiting lists, cutting the national debt and cutting the cost of living”.

If Ms Reeves does rip up the manifesto and increase the basic rate of income tax, she would be the first Chancellor to do so for 50 years.Shadow Chancellor Sir Mel Stride said Prime Minister Sir Keir Starmer should sack her if she does hike taxes.

He said: “Rachel Reeves has made an emergency speech because she is panicking about the speculation she has fuelled.

“But all she’s done is confirm the fears of households and businesses – that tax rises are coming.”