Published by Global Banking & Finance Review®
Posted on November 19, 2025
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleUK PM Keir Starmer may extend the income tax threshold freeze, impacting tax rates until 2030. Finance Minister Rachel Reeves needs to raise billions in taxes.
LONDON (Reuters) -British Prime Minister Keir Starmer did not rule out extending an income tax threshold freeze when asked about it on Wednesday, amid ongoing speculation about finance minister Rachel Reeves's budget next week.
Reeves needs to raise tens of billions of pounds in taxes in her November 26 budget to stay on track for her self-imposed fiscal rules. A government source said on November 14 that she had no plans to raise income tax rates.
She could, however, extend a freeze on the thresholds at which people pay basic and higher income tax rates by two years until 2030, raising about 8 billion pounds a year.
"The budget is one week today and we will lay out our plans," said Starmer when asked in the House of Commons to confirm whether income tax thresholds would be frozen again.
Reeves had said in her first budget last October that extending the freeze would amount to a break in the Labour Party's election manifesto pledge not raise taxes for "working people".
Last year she said: "From 2028-29, personal tax thresholds will be uprated in line with inflation once again."
By extending the freeze, more people are dragged into paying higher rates of tax as wage inflation pushes up their salaries.
(Reporting by Sarah Young, editing by Andy Bruce)
A tax threshold is the level of income at which an individual begins to pay income tax. Income below this threshold is not taxed, while income above it is subject to taxation.
Wage inflation occurs when the average wage level in an economy rises, often due to increased demand for labor. This can lead to higher costs for businesses and can influence overall inflation.
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