Labour is to propose an amendment to the budget in an attempt to clarify its stance on the government’s tax cuts for higher earners and to defuse a row within its own party. The amendment proposes increasing the rates paid by the top 5% of earners.

While the change stands virtually no chance of being passed, it is being used as a way to re-state Labour’s tax policy following dissent over the party’s position on the proposed increase to the higher-rate tax threshold.

Analysis has shown the chancellor’s plan to raise the starting point for the 40% higher rate for income tax to £50,000, along with an increase in the basic personal tax allowance, will predominantly help higher earners. However, Labour decided to not oppose the measure, sparking a backlash from some of its MPs.

The shadow chancellor, John McDonnell, said on Wednesday that the party “would probably abstain” if there was a specific vote on tax thresholds, but would nevertheless vote against the budget as a whole.

By contrast, the Liberal Democrats have said their MPs will vote against raising the 40% threshold. The party’s leader, Vince Cable, said the chancellor, Philip Hammond, should instead use the money to either further fund universal credit, or end the benefit freeze a year earlier.

It is understood that Labour, during the final day of the budget debate on Thursday, will submit an amendment signed by McDonnell as well as Jeremy Corbyn and other frontbenchers, which will outline an alternative tax plan.

This would target the highest earners, reducing the threshold for the 45% additional rate of tax from £150,000 to £80,000 and introducing another band on top, of 50%, for incomes of £125,000 or more.

At prime minister’s questions on Wednesday, Theresa May mocked the Labour leader for what she said was a mixed message from Labour on tax cuts.

Speaking afterwards, Corbyn’s spokesman said it was the “wrong choice” to give tax cuts to relatively high earners but said the party could not reverse them, suggesting its hands were tied by a manifesto commitment it had made not to increase tax on 95% on earners.

“We will be voting against the budget but in relation to the specific proposals on tax allowances, as John McDonnell has made clear, we support putting more money into the pockets of lower and middle-income earners,” he said. “We are not going to oppose that. In the budget resolutions it is impossible to separate out the top 5%. But giving tax cuts to the highest earners is obviously wrong as the government is refusing to halt the benefit freeze.”

The Labour spokesman insisted the party had already committed to ending the benefits freeze – a measure not spelt out in the party’s 2017 manifesto – saying its spending commitments had made those clear.

In their statement, the Lib Dems said the £1.3bn earmarked for the tax cuts should instead be spent on social security, meaning they would oppose the measure.

Cable said: “Government is about priorities. With public services desperate for investment, now is not the time to reduce taxes for high earners. Instead, Philip Hammond should use the money to further reverse cuts to universal credit or end the benefits freeze a year early.”