Chancellor abandons income tax hike

The government has reversed its decision to raise income tax. A source said that Prime Minister Keir Starmer and Chancellor Rachel Reeves decided against the tax increase after a series of intense briefings and amid concern over the response from voters. Instead, they may consider smaller tax-raising measures to address a shortfall in the public finances that could be as high as £30bn. The U-turn on the tax hike has been submitted to the Office for Budget Responsibility. It has been suggested that the Chancellor could instead cut the thresholds at which different rates of income tax are paid while leaving the basic and higher rates unchanged.