Rachel Reeves has revealed a £26 billion annual increase in taxes in a Budget that was leaked just before its official release.
The Chancellor introduced a new mansion tax targeting properties valued at over £2 million and confirmed the removal of the two-child benefit restriction, responding to long-standing demands from anti-poverty activists.
Notably, income tax thresholds will be frozen, affecting over 1.5 million employees. Additionally, 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 declared, “These are my decisions, the right ones for a more equitable, robust, and secure Britain.”
The Mirror now examines the crucial aspects of the eagerly awaited Budget.
In a significant development, the Chancellor announced a fresh tax on residences exceeding £2 million, projected to impact between 100,000 and 200,000 homes. This levy, ranging from £2,500 to £7,500 annually, is anticipated to generate approximately £400 million per year for the Treasury.
The Budget includes a “high value council tax surcharge” for properties valued over £2 million.
The Office for Budget Responsibility (OBR) stated, “Starting April 2028, owners of properties valued above £2 million will face an annual charge in addition to their existing council tax liability.” The surcharge will vary based on property value bands, reaching £7,500 for properties valued at £5 million or more.
Furthermore, the Chancellor abolished the controversial two-child benefit cap, associated with child poverty. Initially introduced by the Conservatives in 2017, it restricted child tax credits and universal credit to the first two children in a family. OBR estimates indicate a £3 billion cost to the Treasury by 2029-30, with an anticipated reduction of child poverty by 450,000.
Labour MPs, along with former Prime Minister Gordon Brown, have long advocated for the removal of this policy, which has caused internal discord within the party. Ms. Reeves also announced that benefits will be adjusted in line with inflation come April.
Ms. Reeves detailed plans to raise £1.1 billion through gambling tax reforms, including a hike in remote gaming duty from 21% to 40% effective April 2026. Additionally, a new general betting duty rate of 25% for remote betting will be introduced from April 2027, excluding specific betting categories.
These measures are predicted to generate £1.1 billion by 2029-30. The Chancellor received applause for the decision to eliminate Bingo Duty.
Moreover, the Chancellor disclosed the first rail fare freeze in three decades, translating to a collective savings of £600 million for rail passengers in 2026/27 across more than a billion journeys. Transport Secretary Heidi Alexander emphasized the public dissatisfaction with previous rail fare increases under Conservative stewardship.
Income tax thresholds will remain frozen for an additional two years, extending until 2030. This contentious move will result in more individuals transitioning into higher tax brackets as their incomes rise.
The OBR forecasts a total yield of £56 billion in 2030-31 from the income tax changes, with £12 billion attributed to the current Budget freezes. An estimated 780,000 more individuals will be subject to the basic rate, 920,000 to the higher rate, and 4,000 to the additional rate.
The Budget confirmed the introduction of a new mileage-based charge for electric and plug-in hybrid vehicles starting April 2028. Expected to be half the fuel duty rate for petrol car drivers, this measure aims to raise £1.4 billion for the Treasury.
Ms. Reeves announced a £150 reduction in average household energy bills from April, criticizing the ineffective Conservative ECO scheme. Emphasizing the promise to lower energy costs and living expenses, Ms. Reeves highlighted the Labour commitment to enhancing energy security and alleviating financial burdens on working families.
Millions of pensioners are set to receive a £550 annual boost as the state pension rises from April next year. The increase will align with average earnings growth, currently at 4.8% as of September. Under the triple lock guarantee, the state pension adjusts annually in accordance with the highest growth rate among earnings, inflation, or a fixed 2.5%.
The current state pension rate of £230.25 per week is expected to surpass £240 per week from April.
Ms. Reeves plans to maintain the 5p fuel duty cut until September 2026, followed by a phased reversal according to the OBR.
The Chancellor confirmed salary increases for approximately 2.7 million workers from April, including a rise in the National Living Wage to £12.71 per hour for individuals aged over 21, benefiting around 2.4 million low-wage earners. The National Minimum Wage for 18 to 20-year-olds will also surge by 8.5% to £10.85 per hour.