South West Devon MP challenges Labour over Budget tax rises affecting families

Rebecca Smith, MP for South West Devon, has criticised the Government after Labour MPs voted this week to approve a series of tax changes linked to last week’s Budget.

The measures, passed in the House of Commons on 2 December, include freezes to income tax thresholds, increases to dividend tax rates and changes to inheritance tax, agricultural property relief and capital gains reliefs. 

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All votes cited in Smith’s statement came from the official parliamentary record, Hansard.

According to the Office for Budget Responsibility (OBR), freezing income tax thresholds from 2028-29 is expected to bring an additional 1.7 million people into higher tax brackets nationally by 2029-30. 

Financial firm AJ Bell has estimated that a person earning £47,000 could pay around £1,292 more in tax over three years as a result of the freeze.

Dividend tax rates will also rise by two percentage points, and Labour MPs voted 350 to 0 in favour of this change, with Smith saying this would affect pensioners who rely on dividend income.

Inheritance tax rules will also be extended to include unused pension funds and death benefits. 

Government figures suggest around 38,500 more estates would fall within inheritance tax under the change, with an average additional liability of £34,000.

Agricultural Property Relief will be reduced, which Smith says will affect family farms, and capital gains relief for disposals to Employee Ownership Trusts will be cut from 100 per cent to 50 per cent.

Rebecca Smith MP said the measures would raise costs for “working families in South West Devon”. She described Labour’s approach as “a betrayal of working people”.

Shadow Chancellor Sir Mel Stride MP also issued a statement criticising the Government, saying Labour had broken its manifesto commitment by supporting higher taxes.

“Labour promised not to raise taxes on working people - it’s there in black and white. Yet after Rachel Reeves misled the public about the state of the economy, last night Labour MPs have backed higher taxes to punish hardworking families and fund more benefits” he said.

In their response, the Conservative Party said it would take a different approach, claiming it has a plan to reduce Government spending by £47 billion through welfare cuts, reductions to the Civil Service and other changes.