Rachel Reeves on Wednesday delivered her Budget to the House of Commons.
Here, we summarise the key tax and spending policies that the Chancellor announced.
The total tax increases, by 2029-30, will amount to £26bn, with 920,000 more higher-rate taxpayers by that point.
That will mean a record tax burden of 38.3pc of GDP by the end of the decade.
Income tax
The Chancellor has extended the freeze on income tax thresholds for another three years beyond 2028.This stealth tax is expected to raise £8.3bn a year.It will mean income tax thresholds do not increase with inflation, meaning more people will fall into higher bands when they receive pay rises.Thresholds will stay the same for the 2028-29, 2029-30 and 2030-31 financial years.This will lead to an estimated 920,000 extra higher-rate taxpayers, according to the Office for Budget Responsibility.
Pay per mile tax on EVs
Electric vehicle drivers are facing a new pay-per-mile tax from 2028-29, charging 3p per mile.It will be in addition to other road taxes and cost the average driver £255 a year to begin with.The charge will increase in line with inflation and is expected to raise £1.1bn in its first year, rising to £1.9bn by 2030-31.However, the Government will also provide some relief by raising the threshold for the expensive car supplement, an additional charge on Vehicle Excise Duty, from £40,000 to £50,000 for EVs from April 2026.
Fuel duty
Fuel duty has been frozen at the current rate of 52.95 pence per litre of petrol or diesel for a further five months.This includes an extension of the 5p temporary cut, which will be unwound in September 2026.From April 2027, fuel duty will then increase annually in line with the RPI measure of inflation.This is expected to cost motorists £2.4bn next year and £900m a year thereafter.
Pension salary sacrifice
Salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance from April 2029.This means that salary-sacrificed contributions above that limit will be subject to both employer and employee National Insurance, or 15pc and 8pc respectively for earnings under £50,270 and 2pc on income above that level.The policy is expected to raise £4.7bn in 2029-30 and £2.6bn in 2030-31.
Property
The owners of properties worth £2m or more face a new “high value council tax surcharge” from April 2028.There will be four bands, with properties worth £2m to £2.5m incurring a surcharge of £2,500 and the charge rising to £7,500 for those worth £5m or more.Property income tax will also rise by two percentage points from April 2027, to 22pc, 42pc and 47pc for the basic, higher and additional rates.
Savings and dividends
The amount you can save tax-free in a cash Isa will be slashed from £20,000 to £12,000, from April 2027 – unless you are aged over 65.The basic and higher rates of tax on dividends are also rising by two percentage points to 10.75pc and 35.75pc respectively, from April 2026.Savings income tax will rise by two percentage points from April 2027, to 22pc, 42pc and 47pc for the basic, higher and additional rates.
Energy bills
Reeves is also planning to cut an estimated average of £154 from annual domestic energy bills by moving or removing green levies from bills.The Treasury will pay 75pc of the costs of the Renewables Obligation, which funded the first generation of wind farms, equating to a discount of about £88 per year for the typical household.Another £59 in savings will come from scrapping the Energy Company Obligation (ECO), which funds insulation schemes, while VAT will fall by £7 due to both measures.
Capital gains tax
The capital gains tax relief that company owners receive when they sell their shares to employee-owned trusts is being slashed from 100pc to 50pc, with immediate effect.
Corporation tax
The Government has slashed writing down allowances (WDAs), which allow businesses to deduct capital costs from the profits they pay corporation tax on.The main rate for WDAs will be reduced from 18pc to 14pc from April 2026, while there will also be a new 40pc first-year allowance for companies from January 2026.It’s expected to raise £1.5bn a year by 2029-30.
Gambling
Remote gaming duty will climb from 21pc to 40pc in April 2026, while bingo duty will be scrapped.The Government will also introduce a new rate of general betting duty for remote betting, set at 25pc, from April 2027.Self-service betting terminals, spread betting, pool bets and horse-racing are spared from the new levy.Casino gaming duty bands will be frozen in 2026-27, before rising in line with RPI in the following years.The tax raid on gambling firms and betting companies will raise an estimated £1.1bn by 2029-30.
Welfare spending surge
Welfare spending is expected to climb £16bn higher by the end of the decade, due to policy changes and higher-than-expected unemployment.Extra costs include a decision to scrap the two-child benefit cap at £3bn a year, along with an extension of the winter fuel payment scheme costing £1.7bn.Costs are also being driven higher by the Government’s about-turn on tightening the eligibility for Personal Independence Payments (PIP); an increase in disability caseloads; and inflation-linked increases in working-age benefits and the state pension “triple lock”.
Student loans
The Government has frozen the repayment and interest rate thresholds for Plan 2 student loan repayments for three years beginning in 2027-28.The move, which freezes interest rates at 7.9pc, instead of falling alongside interest rates and inflation, will raise £400m a year.
Taxi and tourist taxes
Ride-hailing companies such as Uber and Bolt will no longer be eligible for VAT discounts.This will mean they can no longer take advantage of the “tour operator margin scheme”, intended for coach tours, where they pay tax on their margins, instead of the overall sale value.Regional mayors will be given powers to charge a “modest” tourist levy in local hotels, B&Bs, guest houses and other accommodation. This measure was announced the day before the Budget.
Tax collection crackdown
A raft of new measures have been announced to close the “tax gap” – the difference between the amount of tax that should be collected in theory versus actual returns.HMRC will also hire more debt collectors to pursue money the Exchequer is owed.There are estimated to raise an additional £2.3bn by 2029-30.
Economic forecasts
The economy is expected to grow by average of 1.5pc per year until the end of the decade, a downgrade of 0.3 percentage points compared to March due to weaker than expected productivity.Borrowing expected to fall from 4.5pc of GDP in 2025-26 to 1.9pc by 2030-31.Debt as a share of GDP set to be 96pc of GDP by end of the decade – up from 95pc currently.This is two percentage points higher than anticipated in March and twice the debt level of the average rich country, according to the OBR.Debt interest will be £14bn a year higher by the end of the decade.
