Rachel Reeves has announced a series of tax increases totaling £26 billion annually 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 confirmed the removal of the two-child benefit limit, a move long advocated by anti-poverty activists.
Additionally, income tax thresholds will be frozen, affecting over 1.5 million workers. The gambling sector will face new levies, while fuel duty will remain unchanged until the following year, as per Ms. Reeves’ statements in the House of Commons.
Some key highlights from the Budget include a new tax on homes exceeding £2 million, expected to impact between 100,000 and 200,000 properties, raising approximately £400 million annually. The Chancellor also announced a “high value council tax surcharge” on properties over £2 million, with the fee varying based on property value bands.
Moreover, the Budget abolished the controversial two-child benefit limit, forecasted to cost the Treasury around £3 billion by 2029-30 but estimated to reduce child poverty by 450,000. Labour MPs, including Gordon Brown, have long campaigned for this policy change.
Further changes in the Budget include significant reforms to gambling taxes, a freeze on rail fares for the first time in three decades, and the extension of income tax threshold freezes until 2030, resulting in more individuals entering higher tax brackets as their incomes rise.
Other notable announcements encompass the introduction of a mileage-based charge on electric and plug-in hybrid cars, a reduction of £150 in average household energy bills, and an increase in the National Living Wage to £12.71 per hour for individuals over 21 years old from April.
The Budget also outlined plans for national insurance contributions on pension schemes, a wider tax on sugary drinks to combat obesity, and adjustments to cash ISA limits. Additionally, a new tax on overnight stays in hotels and holiday accommodations, as well as investments in healthcare technology and infrastructure projects like the Lower Thames Crossing, were confirmed.
Overall, the Budget aims to address various economic and social issues, with a focus on fair taxation, poverty alleviation, and strategic investments in key sectors.