UK Treasury minister Emma Reynolds says employers are not working people

On GB News, Treasury minister Emma Reynolds sparked a fresh wave of debate by declaring that employers do not fall under the definition of “working people.” The remark came as Labour’s 2024 election manifesto pledged that working people would not face tax rises, a promise that has been questioned in light of the government’s fiscal agenda.

Reynolds’ comment, delivered in a televised interview, was met with immediate backlash from business groups. Many argued that the Treasury’s tax measures place a heavier burden on small‑business owners and that the Labour pledge was effectively broken.

“I don’t think employers are working people, they are companies,” Reynolds said. The statement was followed by a brief clarification: “I did not agree with that” about the new tax increases, though she added that she “understands some businesses are in a difficult position.” The quotes, sourced directly from the interview, highlight the minister’s attempt to distance the government’s policies from its campaign promises.

According to Labour’s 2024 election manifesto, the party vowed not to raise taxes on “working people,” explicitly ruling out hikes to income tax, employee National Insurance, or VAT. The Treasury’s recent budget appears to conflict with that pledge. Critics argue that the changes to employer taxation and the extension of frozen thresholds increase the tax burden on business owners.

In the Budget, the Treasury announced a sharp rise in the rates applied to savings interest and property income. The new rates will take effect from April 2027, lifting basic‑rate savers to 24 %, higher‑rate savers to 44 %, and additional‑rate savers to 49 %. These adjustments target personal savings and rental income, sectors traditionally considered separate from the workforce.

The Treasury also introduced a 10 % Founder’s Relief for certain start‑ups, a move aimed at encouraging entrepreneurship. However, industry leaders argue that this relief is insufficient to offset the increased tax exposure from the other measures.

Another significant change was the reduction of Business Asset Disposal Relief. The relief, which previously allowed a £1 million tax‑free threshold on capital gains from qualifying assets, was cut to £500 000. The move has been criticized as a direct hit on small‑business owners who rely on this relief to manage the sale of business assets.

Beyond the immediate tax adjustments, the Treasury’s broader fiscal strategy includes a freeze on tax thresholds and a rise in the minimum wage. These policies are seen by some as complementary to the tax increases, further tightening the financial envelope for employers.

Business organisations have warned that the new tax regime could spur a wave of exits from the landlord and savers market. By treating these income streams separately from the workforce, the Treasury’s approach may encourage some landlords to sell properties and withdraw from the market, reshaping the rental landscape.

Reynolds defended the Treasury’s approach, describing the tax increases as “targeted and fair.”