Rachel Reeves has announced a yearly tax increase of £26 billion in a Budget that was revealed just before its official release. The Chancellor introduced a new mansion tax for properties valued over £2 million and confirmed the removal of the two-child benefit limit. 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 the rowdy House of Commons, Ms. Reeves stated, “These are my choices. The right choices for a fairer, a stronger, and more secure Britain.” The Mirror analyzes key points from the long-awaited Budget, emphasizing the impact on various sectors.
The Chancellor’s new tax on homes exceeding £2 million is estimated to affect 100,000 to 200,000 properties, generating approximately £400 million annually for the Treasury. A “high value council tax surcharge” will be imposed on these properties, with charges ranging from £2,500 to £7,500 per year based on property value bands.
Furthermore, the Budget abolishes the two-child benefit limit, a policy criticized for perpetuating child poverty. Introduced in 2017, this policy restricts child tax credits, with estimated costs to the Treasury reaching £3 billion by 2029-30. The government anticipates a reduction in child poverty by 450,000 as a result of ending this limit.
Labour MPs and former Prime Minister Gordon Brown have long advocated for the removal of the two-child policy, which has caused internal party tensions. Ms. Reeves also announced the uprating of benefits in line with inflation from April. Additionally, the Budget outlines a plan to raise £1.1 billion through reforms in gambling taxes, including an increase in remote gaming duty.
The Budget also includes the first rail fare freeze in 30 years, offering savings of £600 million to rail passengers in the upcoming year. Moreover, income tax thresholds will be frozen until 2030, affecting more individuals moving into higher tax brackets as their incomes rise.
To promote energy bill affordability, the Budget promises a £150 reduction in average household energy bills from April. This initiative aims to alleviate financial burdens on working families while enhancing energy security in the country.
Pensioners are set to receive approximately £550 more annually as the state pension increases from April, in line with average earnings growth. The Budget also confirms a 5p cut in fuel duty until September 2026, followed by a phased reversal.
Other notable measures include pay hikes for around 2.7 million workers, with the National Living Wage rising to £12.71 per hour for individuals over 21. Additionally, the Budget introduces national insurance contributions on salary-sacrificed pensions, expected to raise £4.7 billion annually.
In a bid to combat obesity, the Budget widens the tax on sugary drinks, impacting more beverages with higher sugar content. The Soft Drinks Industry Levy threshold is reduced to 4.5g of sugar per 100ml, with the changes set to take effect from January 2028.
Furthermore, Ms. Reeves confirms a reduction in the annual cash ISA limit to £12,000 starting April 2027, affecting younger savers. The Budget also introduces a new tax on overnight stays in accommodation, including Airbnbs, aimed at promoting local economies with funds allocated to regional authorities.
To enhance healthcare services, the Budget allocates £300 million for NHS technology investments and the establishment of 250 new neighborhood health centers. Moreover, funding for the Lower Thames Crossing and various transport infrastructure projects is confirmed to boost regional development.
Overall, the Budget outlines a comprehensive fiscal strategy with key reforms and investments designed to strengthen the economy, support vulnerable populations, and drive growth across sectors.