The Labour Party in 2025 is expected to raise taxes primarily on high earners and wealth, with specifics including:
- An increase in income tax rates for individuals with taxable income above £80,000, introducing a new 45% marginal rate starting at this threshold, and a new 50% marginal rate starting at £123,000 (where the personal allowance is fully withdrawn). This affects about 1.3 million people, representing the top 2% of adults by income.
- Labour retains policies that increase effective marginal tax rates to as high as 67.5% for incomes between £80,000 and £123,000, combining income tax and National Insurance contributions.
- Capital Gains Tax is being raised to 24%, although not yet fully aligned with income tax rates.
- The government plans to scrap non-dom status, close tax loopholes, and implement new wealth taxes such as a 2% wealth tax on fortunes above £10 million.
- Additional tax changes include closing inheritance tax loopholes and doubling taxes on private jets, targeting wealth and assets of the very rich.
- Labour has stated a manifesto commitment not to raise income tax or VAT broadly at this time, but decisions are still to be finalized in the November budget. Other tax rises cannot be ruled out completely.
In summary, Labour focuses on raising taxes on higher incomes and wealth, including income tax hikes for high earners, capital gains tax increases, wealth taxes, and closing various tax loopholes, while maintaining current pledges not to increase income tax and VAT rates for most taxpayers as of now. Further budget announcements in November 2025 are expected to clarify the full tax plan.
