Rachel Reeves has revealed a yearly tax increase of £26 billion in a Budget that was leaked shortly 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 limit, a move long advocated by anti-poverty activists. Additionally, income tax thresholds will be frozen, impacting over 1.5 million workers. The gambling sector will face new levies, while fuel duty will remain unchanged until the following year.
Addressing a lively House of Commons, Ms. Reeves stated, “These are my decisions, the right choices for a fairer, stronger, and more secure Britain.”
Key points from the highly anticipated Budget were examined by The Mirror.
A new tax on properties exceeding £2 million was announced, expected to affect 100,000 to 200,000 homes and generate approximately £400 million annually for the Treasury.
Moreover, a “high value council tax surcharge” will be imposed on properties valued over £2 million starting from April 2028, as per the Office for Budget Responsibility (OBR).
The Chancellor eliminated the contentious two-child benefit limit, a policy criticized for perpetuating child poverty since its inception in 2017. The OBR estimates this change will cost the Treasury £3 billion by 2029-30 but could reduce child poverty by 450,000.
Labour MPs and former Prime Minister Gordon Brown had long urged Keir Starmer and his team to abolish the policy. Ms. Reeves also confirmed benefits would be adjusted for inflation in April.
Furthermore, the Chancellor outlined plans to raise £1.1 billion through gambling tax reforms, including a rise in remote gaming duty from 21% to 40% by April 2026. A new general betting duty for remote betting at 25% will be implemented by April 2027, excluding certain types of betting activities.
Additionally, the Budget introduced the first rail fare freeze in three decades aiming to save rail passengers £600 million in the upcoming year across more than a billion journeys. Income tax thresholds will remain frozen until 2030, potentially pushing more individuals into higher tax brackets.
Furthermore, a new mileage-based charge on electric and plug-in hybrid cars is set to be enforced from April 2028, projected to raise £1.4 billion for the Treasury. The average household can anticipate a £150 reduction in energy bills effective April.
Pensioners will receive a yearly increase of around £550 as the state pension rises from April next year. The state pension rate is expected to surpass £240 per week from April.
Ms. Reeves will uphold the 5p fuel duty cut until September 2026, followed by a gradual reversal according to the OBR.
The Chancellor confirmed pay raises for approximately 2.7 million workers effective April, with the National Living Wage increasing to £12.71 per hour for those over 21 years old. The National Minimum Wage for 18 to 20-year-olds will also rise to £10.85 per hour.
Moreover, national insurance contributions will now apply to salary-sacrificed pension contributions, estimated to generate £4.7 billion annually.
The Budget expanded the tax on sugary drinks to combat obesity, widening the Soft Drinks Industry Levy threshold to 4.5g of sugar per 100ml. Manufacturers will need to reduce sugar levels in beverages or face the levy starting January 2028.
Lastly, a new tax on overnight stays in accommodations, including Airbnbs, was introduced, expected to increase costs by £2 per night with funds allocated to regional authorities.
Ms. Reeves pledged a £300 million investment in NHS technology to enhance patient services and establish 250 new neighborhood health centers by 2030.
Funding for the Lower Thames Crossing and various transport projects was confirmed, demonstrating a commitment to infrastructure development and growth across regions.