Andy Burnham hints at HMRC income tax rule change for everyone earning over £125,140

Andy Burnham has hinted at introducing a new 50% income tax rate, according to observations from financial commentators. The change could replace the current 45% higher rate of income tax which is paid on any income over £125,140 a year.

Blick Rothenburg's Nimesh Shah believes the anticipated Prime Minister could introduce this higher rate. The move would see someone earning £150,000 pay around £1,250 more in income tax per year. Strictly speaking, introducing 50% income tax will break Labour's manifesto promise to not increase income tax, NIC or VAT, according to Shah's analysis.

Burnham, the new MP for Makerfield, is widely anticipated to be the next Prime Minister following Sir Keir Starmer's recent resignation. However, his recent speech was notably silent on specific tax policy decisions. Grant Thornton noted that Burnham set out his approach to growing the economy and his commitment to the Government's fiscal rules, focusing on devolution of power and establishing a Number 10 of the North based in Manchester.

The speech emphasised a 10-year mission to improve living standards through reindustrialisation, reform of essential utilities including housing, and regeneration of places. Beyond a passing mention of business rates reform to support pubs and the high street, concrete tax proposals were absent.

According to analysis, Burnham is likely to preserve flexibility on tax policy, taking advice from officials and reserving firm decisions for a Budget later this year. The uncertainty surrounding potential changes means there is unlikely to be one single right course of action in many cases. Some changes already in motion might be accelerated to ensure certainty of tax treatment, while other scenarios may require a wait-and-see approach or flexibility to pivot in different directions. Understanding the options available early remains important as there may still be a window to act if needed.