Rachel Reeves has introduced tax increases amounting to £26 billion annually in a Budget that was leaked just before its official release. The Chancellor revealed a new mansion tax targeting properties valued above £2 million and confirmed the removal of the two-child benefit limit. Additionally, she announced a freeze on income tax thresholds, impacting over 1.5 million workers, while imposing new levies on the gambling industry. Fuel duty will remain unchanged until the following year, according to Ms. Reeves.
Addressing the rowdy House of Commons, Ms. Reeves stated, “These are my choices, the right choices for a fairer, stronger, and more secure Britain.” The Mirror has outlined the crucial points from the long-awaited Budget.
A new tax on homes exceeding £2 million has been introduced, estimated to impact between 100,000 and 200,000 properties. The tax ranges from £2,500 to £7,500 per year, aiming to generate approximately £400 million annually for the Treasury.
The Budget includes a “high value council tax surcharge” on properties valued over £2 million, with varying charges based on property bands. The Chancellor also scrapped the two-child benefit limit, a move expected to cost the Treasury £3 billion by 2029-30 while potentially reducing child poverty by 450,000.
Labour MPs, alongside former Prime Minister Gordon Brown, successfully lobbied Keir Starmer to abolish the controversial policy. Ms. Reeves further announced benefits will be adjusted for inflation in April.
In a significant development, the Chancellor proposed raising £1.1 billion through gambling tax reforms starting from April 2026. The measures involve increasing remote gaming duty and introducing a new general betting duty, excluding certain types of betting.
Furthermore, the Budget includes the first rail fare freeze in three decades, benefiting existing rail passengers with savings totaling £600 million in the upcoming fiscal year. Income tax thresholds will be frozen for an additional two years until 2030, potentially pushing more individuals into higher tax brackets.
A new mileage-based charge on electric and plug-in hybrid cars is set to commence in April 2028, expected to raise £1.4 billion for the Treasury. Additionally, the average household will witness a £150 reduction in energy bills from April.
Pensioners are set to receive a yearly increase of around £550 as the state pension escalates from April next year. The state pension rate is anticipated to rise to over £240 per week.
Moreover, the Chancellor will maintain the 5p fuel duty cut until September 2026, followed by a phased reversal. Pay hikes for approximately 2.7 million workers are confirmed from April, including a rise in the National Living Wage and the National Minimum Wage for younger workers.
National insurance contributions will now apply to salary-sacrificed pension contributions, estimated to raise £4.7 billion annually. The Budget also widens the tax on sugary drinks and introduces a new levy on overnight stays in accommodations to combat obesity.
Ms. Reeves pledged a £300 million investment in NHS technology, aiming to enhance patient services and establish new health centers. Additionally, funding has been allocated for the Lower Thames Crossing project and various transport upgrades.
The cash ISA limit will be reduced to £12,000 for younger savers from April 2027, while over-65s can still save up to £20,000 per tax year in a cash ISA. Lastly, a tax on overnight stays in accommodations will be implemented, with revenue directed to local authorities for regional development projects.