Rachel Reeves has announced a £26 billion annual increase in taxes in a Budget that was leaked just before its official release. The Chancellor introduced a new mansion tax for homes valued over £2 million and confirmed the removal of the two-child benefit restriction. Additionally, income tax thresholds will be frozen, affecting more than 1.5 million workers. The gambling industry will face new levies, while fuel duty will remain unchanged until the following year.
Addressing a lively House of Commons, Ms. Reeves defended her decisions as necessary for creating a fairer, stronger, and more secure Britain. Key points from the Chancellor’s Budget include a new tax on properties exceeding £2 million, expected to impact 100,000 to 200,000 homes, generating approximately £400 million annually.
Furthermore, the Budget introduces a council tax surcharge on high-value properties and eliminates the two-child benefit limit, a move aimed at reducing child poverty. The Chancellor also announced significant reforms to gambling taxes, projecting an additional £1.1 billion in revenue by 2029-30. Rail fares will be frozen for the first time in 30 years, benefiting over a billion train passengers.
Income tax thresholds will remain frozen until 2030, leading to more individuals entering higher tax brackets as their incomes rise. A new mileage-based charge on electric and plug-in hybrid cars will be implemented in 2028, expected to raise £1.4 billion for the Treasury. The average household will see a £150 reduction in energy bills starting in April.
Pensioners will receive a boost of around £550 annually as the state pension increases next April. Additionally, pay raises are confirmed for 2.7 million workers, with the National Living Wage rising to £12.71 per hour for those over 21 years old. National insurance contributions on salary-sacrificed pensions will be introduced, estimated to raise £4.7 billion yearly.
Other changes include widening the tax on sugary drinks, reducing the cash ISA limit for younger savers, and implementing a new tax on overnight stays in accommodations. A £300 million investment in NHS technology was announced, along with funding for the Lower Thames Crossing project.
