Rachel Reeves has revealed a yearly £26 billion tax increase in a Budget that was leaked shortly before its official release. The Chancellor introduced a new mansion tax targeting properties valued over £2 million and announced the removal of the controversial two-child benefit restriction. Additionally, income tax thresholds will be frozen, affecting over 1.5 million workers. The gambling industry will face new levies, but fuel duty will remain unchanged until the following year.
During a lively House of Commons session, Ms. Reeves stated, “These are my decisions. They are the right choices for creating a fairer, stronger, and more secure Britain.” The Mirror examines the key highlights from the long-awaited Budget announcement.
A new tax on homes exceeding £2 million was unveiled, expected to impact between 100,000 and 200,000 properties. The tax ranges from £2,500 to £7,500 annually, aiming to generate approximately £400 million for the Treasury each year.
Furthermore, the Budget includes a “high value council tax surcharge” for properties valued over £2 million, as confirmed by the OBR. Starting in April 2028, property owners in specified value bands will face an additional annual charge on top of their council tax liability.
The Chancellor scrapped the two-child benefit limit, a policy criticized for perpetuating child poverty. Originally implemented by the Conservatives in 2017, the removal is estimated to cost the Treasury £3 billion by 2029-30 but is projected to reduce child poverty by 450,000.
Labour MPs and former PM Gordon Brown have long pushed for this change, leading to the Chancellor’s announcement that benefits will be updated in line with inflation starting in April. In a significant move, reforms to gambling taxes were introduced, aiming to raise £1.1 billion by 2029-30. Bingo Duty will also be eliminated, drawing cheers from the audience.
Additionally, the Budget revealed the first rail fare freeze in three decades, benefiting existing rail passengers by £600 million in the upcoming fiscal year. Income tax thresholds will remain frozen until 2030, affecting 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 from April 2028, projected to raise £1.4 billion for the Treasury. Moreover, an average household is set to receive a £150 reduction in energy bills from April, aligning with efforts to cut living costs.
Pensioners can anticipate a £550-per-year boost as the state pension increases from April next year. The state pension rate is expected to rise from £230.25 to over £240 per week. Notably, fuel duty cuts will be extended until September 2026, with subsequent staggered increases.
The Budget also includes pay raises for approximately 2.7 million workers, with the National Living Wage increasing to £12.71 per hour for workers over 21-years-old. Furthermore, national insurance contributions will now apply to salary-sacrificed pension contributions, projected to raise £4.7 billion annually.
To combat obesity, the tax on sugary drinks will be broadened, impacting more beverages unless sugar levels are reduced. The Soft Drinks Industry Levy threshold will decrease, targeting milkshakes and pre-packaged coffees for the first time.
In a move affecting savers, the annual cash ISA limit will be reduced to £12,000 from April 2027 for younger individuals. Over-65s remain unaffected, maintaining the £20,000 ISA limit. A new tax on overnight stays in accommodations will be introduced, potentially raising costs by £2 per night.
Rachel Reeves pledged a £300 million investment in NHS technology and the establishment of 250 new neighborhood health centers. Funding for the Lower Thames Crossing and other transportation projects was confirmed to enhance infrastructure across regions.
The Budget outlines a comprehensive set of fiscal adjustments, aiming to address key economic and social challenges while promoting financial stability and fairness.