Treasury minister: ‘I don’t think employers are working people’

A top treasury minister has said she does not think “employers are working people” – reigniting fierce debate over whether Labour broke its manifesto pledge not to raise taxes for working people. In its 2024 election manifesto, Labour vowed not to increase taxes on ‘working people’, ruling out hikes to income tax, employee National Insurance and VAT. But the government has come under fire, as critics claim the pledge has been broken through significant changes to employer taxation and extended frozen thresholds, leaving those who own a business facing a high tax burden and increased costs.

But chief secretary to the Treasury, Emma Reynolds , disputed these concerns, arguing employers do not come under the umbrella of what the government considers to count as a working person. Speaking on GB News, Reynolds said: “I don’t think employers are working people, they are companies.” Autumn Budget woes Reynolds also disagreed with claims that employers had been treated unfairly in Healey’s maiden Budget, arguing the tax increases “were targeted and fair”.

But business owners have fiercely pushed back against Healey’s decisions. While the Treasury granted some support for entrepreneurs, including marginal rates relief for certain sectors and a headline 10 per cent Founder’s Relief, industry leaders have argued they are still exposed to a high tax burden. This includes the Chancellor’s decision to slash Business Asset Disposal Relief from £1m to £500,000, leaving small-business owners facing a heavier tax hit on sales.

Combined with former Chancellor Rachel Reeves’ ongoing freeze on tax thresholds and hikes to the minimum wage, employers have warned that more businesses will soon have to close their doors. Savings and rental income Healey’s fresh raid on savings and rental income has also been blasted by industry leaders for targeting employers who rely on personal savings or property portfolios for an income. But Reynolds said she “did not agree with that” despite saying she understands some businesses “are in a difficult position”.

In the Budget, Healey unveiled sharp increases to the tax rates levied on savings interest and property income, lifting them to 24 per cent for basic-rate payers, 44 per cent for higher-rate payers, and 49 per cent for additional-rate earners from April 2027. For owner-managers and sole traders, the move closes off another critical buffer. Entrepreneurs may reinvest spare rental returns or draw upon personal cash balances outside tax-free wrappers to finance business needs.

With the government treating landlords and savers as separate from workers, business organisations have warned that taxing these revenue streams will lead to many landlords selling up and exiting the market.