Reeves tax hike would hit 8m pensioners - and cost them £250 a year

A plan being considered by Rachel Reeves to increase income tax but cut national insurance (NI) by 2p could trigger a new row with pensioners, Labour has been warned.

The Chancellor looking at a 2p rise in income tax across all three rates combined with a 2p cut in the basic rate of NI in a bid to raise £6bn.

Such a move would not impact the take-home pay of workers earning under £50,270, because their income tax increase would be offset by the cut to the basic rate of NI. However, it would hit pensioners adversely because they do not pay NI so their tax rise would not be cancelled out. New Feature

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Under such a system, a pensioner on £15,000 who currently pays £486 in income tax would see this rise to £535.

A pensioner on £20,000 pa