Excessive levels of Budget kite-flying risk exacerbating market uncertainty 14 November 2025 Commenting on the latest rumours that the Chancellor is no longer planning to increase Income Tax rates in her upcoming Budget, following rumours last week that this would be the centrepiece of the Budget, Ruth Curtice, Chief Executive of the Resolution Foundation, said: “At the Budget the Chancellor needs to do three things: take decisive steps to improve the public finances and increase the financial buffers against her fiscal rules; address cost of living pressures for families and support the Bank of England in lowering inflation; and in the interest of growth make tax changes that improve the system overall. “There is more than one way to skin this particular cat, and we won’t know until we see the whole package whether she has achieved these three objectives. “Much depends on the forecasts from the Office for Budget Responsibility. A significant economic deterioration would leave the Chancellor choosing whether to break the spirit or letter of her manifesto pledge on Income Tax. A more benign economic outlook will make it far easier to avoid breaking it at all. “It is normal for economic forecasts and policies to change in the run up to the Budget. It is not normal for so much of that to be laid bare in public. The market moves this morning and in recent weeks suggest a serious look should be taken at the approach to market-sensitive forecast information.” Revenue raising options on the main personal taxes: Freeze personal tax thresholds (Income Tax and employee/self-employed National Insurance) for two more years from April 2028 – £7.5 billion (in 2029-30). Switching 2p of employee National Insurance onto Income Tax (protecting payrolled workers from tax rises but raising revenue from pensioners, landlords and self-employed workers) – £6 billion. Reducing the Higher Rate Threshold for Income Tax and Upper Earnings Limit for employee/self-employed National Insurance from £50,270 to £46,000 by 2029-30 (raising taxes for anyone with an income over £46,000) – £9 billion. The Foundation will analyse the impact of any such policies on individual earnings and household incomes once policies have been confirmed in the Budget.
