Rachel Reeves has revealed a £26 billion per year increase in taxes in a Budget that was leaked just before its official release. The Chancellor introduced a new mansion tax targeting properties valued over £2 million and announced the removal of the two-child benefit limit, a move advocated for by anti-poverty activists for years.
In a controversial decision, income tax thresholds will be frozen, impacting over 1.5 million workers. The gambling industry will face new levies, while fuel duty will remain unchanged until the following year, according to Ms. Reeves.
Addressing the House of Commons, Ms. Reeves stated, “These are my decisions. The right choices for a fairer, stronger, and more secure Britain.” The Mirror examines the key highlights from the eagerly awaited Budget.
A new tax on homes exceeding £2 million has been introduced, affecting an estimated 100,000 to 200,000 properties. This tax, ranging from £2,500 to £7,500 annually, is projected to generate around £400 million for the Treasury each year.
Additionally, a “high value council tax surcharge” on properties valued over £2 million was included in the Budget. The Office for Budget Responsibility (OBR) detailed that property owners above the specified value will face an extra annual charge starting in April 2028.
The Chancellor abolished the controversial two-child benefit limit, which has been linked to child poverty. Initially implemented by the Conservatives in 2017, the policy restricts child tax credits and universal credit to the first two children in a family.
Moreover, there will be adjustments to gambling taxes, with a significant increase in remote gaming duty and a new general betting duty for remote betting starting in 2026 and 2027, respectively. These changes are anticipated to raise £1.1 billion by 2029-30.
Rail fares will be frozen for the first time in 30 years, providing relief to rail passengers with an estimated £600 million in savings in the upcoming fiscal year. Income tax thresholds will remain stagnant for an additional two years until 2030, leading to more individuals moving into higher tax brackets as their incomes rise.
Furthermore, a new mileage-based charge on electric and plug-in hybrid vehicles will be enforced from April 2028, aiming to raise £1.4 billion for the Treasury. The average household can expect a £150 reduction in their energy bills starting in April.
Pensioners are set to receive a boost of approximately £550 annually as the state pension rises from April next year. The state pension rate is projected to surpass £240 per week in the upcoming fiscal year.
The Budget also includes pay raises for around 2.7 million workers, with the National Living Wage increasing to £12.71 per hour for individuals over 21 years old, benefiting an estimated 2.4 million lowest-paid workers. Additionally, national insurance contributions will be applicable to salary-sacrificed pensions, generating £4.7 billion yearly.
To combat obesity and safeguard children’s health, the tax on sugary drinks will be expanded, with adjustments to the Soft Drinks Industry Levy threshold. Manufacturers will need to reduce sugar levels in various beverages to avoid the new charge.
Lastly, Ms. Reeves pledged to invest £300 million in NHS technology to enhance patient services and establish 250 new neighborhood health centers by 2030. Funding for infrastructure projects like the Lower Thames Crossing and regional transport initiatives was also confirmed in the Budget.