British Finance Minister Rachel Reeves unveiled her budget statement on Wednesday, detailing a series of tax increases impacting workers, pension savers, and investors. These measures aim to provide additional fiscal flexibility and meet government borrowing targets. The Office for Budget Responsibility (OBR) inadvertently published its outlook prematurely, issuing an apology for the technical error.
The budget includes freezing income tax thresholds for three more years from 2028, expected to generate £7.6 billion in 2029/30, and introducing a high-value council tax surcharge in England starting in 2028. A new mileage-based charge for electric and plug-in hybrid vehicles will take effect in April 2028, projected to raise £1.4 billion. Dividend tax rates will also increase by 2 percentage points from April next year. Commercial property taxes will be adjusted, increasing rates for high-value properties while lowering them for over 750,000 retail, hospitality, and leisure properties.
In other policy shifts, the two-child limit on welfare payments will be removed from April, at a cost of £3.1 billion in 2029-30. The government will maintain a freeze on fuel duty rates, extending the temporary 5 pence cut until September 2026. There will be increased duties on gambling, expected to raise £1.1 billion by 2029-30. Additionally, the annual tax-free limit for cash investments in an Individual Savings Account will be reduced from £20,000 to £12,000 for most savers from April 2027, though over-65s will keep the full allowance. The so-called ‘motability’ scheme, which allows people with disabilities to lease cars using state funding, is set to be reformed to curb what Reeves described as ‘generous’ taxpayer subsidies.
