Rachel Reeves has disclosed a £26 billion annual tax increase in a Budget that was leaked just before its official release. The Chancellor introduced a new mansion tax affecting properties valued at over £2 million and confirmed the removal of the two-child benefit limit after persistent demands from anti-poverty advocates. Additionally, income tax thresholds will be frozen, affecting over 1.5 million workers, while the gambling industry will face new levies. 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 decisions, the right ones for creating a fairer, stronger, and more secure Britain.” The Mirror examines the essential points from the long-awaited Budget presented by the Chancellor.
A new tax on homes exceeding £2 million has been announced, impacting an estimated 100,000 to 200,000 properties. The tax, ranging from £2,500 to £7,500 annually, is projected to generate approximately £400 million for the Treasury each year.
The Budget includes a “high value council tax surcharge” on properties worth more than £2 million. The Office for Budget Responsibility (OBR) outlined that owners of properties valued over £2 million will face an additional annual charge starting in April 2028, based on property value bands.
In a significant move, the Chancellor scrapped the contentious two-child benefit limit, anticipated to cost the Treasury around £3 billion by 2029-30 but estimated to reduce child poverty by 450,000. Labour MPs and former Prime Minister Gordon Brown had long advocated for this policy change.
Furthermore, the Chancellor unveiled plans to raise £1.1 billion through reforms to gambling taxes, with adjustments to remote gaming duties and general betting duties. The Budget also includes the first rail fare freeze in three decades, saving existing passengers a total of £600 million in the upcoming fiscal year.
Income tax thresholds will be frozen for an additional two years until 2030, leading more individuals into higher tax brackets as their earnings increase. The OBR predicts that these changes will yield a total of £56 billion in 2030-31, with significant impacts on basic, higher, and additional rate taxpayers.
Additionally, a new mileage-based charge on electric and plug-in hybrid cars will be implemented from April 2028, expected to raise £1.4 billion for the Treasury. The average household will witness a £150 reduction in energy bills starting in April, with a focus on cutting costs and enhancing energy security.
Pensioners are set to receive an annual increase of around £550 in the state pension from April next year, based on average earnings growth. The Budget also confirms pay raises for approximately 2.7 million workers, with the National Living Wage rising to £12.71 per hour for workers over 21 years old and adjustments to other wage brackets.
Moreover, national insurance contributions will be imposed on salary-sacrificed pensions contributions, estimated to generate £4.7 billion annually. The Budget also includes wider taxation on sugary drinks, adjustments to ISAs, and a new tax on overnight stays in accommodations.
Ms. Reeves pledged a £300 million investment in NHS technology and the establishment of 250 new neighborhood health centers to enhance patient services. She also allocated funds for the Lower Thames Crossing project and emphasized ongoing investments in transport infrastructure.
Overall, the Budget outlines a series of fiscal measures and policy changes aimed at addressing taxation, benefits, wage increases, and strategic investments across various sectors to strengthen the economy and support public welfare.