Rachel Reeves has revealed a £26 billion per year tax increase in a Budget that was leaked just before its official release. The Chancellor introduced a new mansion tax for properties valued over £2 million and announced the removal of the controversial two-child benefit limit. Additionally, income tax thresholds will be frozen, affecting over 1.5 million workers. The gambling industry will face new levies, while fuel duty will remain unchanged until the following year.
During a lively session in the House of Commons, Ms. Reeves defended her decisions, stating they are aimed at creating a fairer, stronger, and more secure Britain. The Mirror examines the key details unveiled in the long-awaited Budget.
A new tax on homes worth over £2 million is anticipated to impact between 100,000 and 200,000 properties, generating approximately £400 million annually for the Treasury. The Budget includes a high-value council tax surcharge on properties exceeding £2 million, set to be implemented from April 2028.
The Chancellor also abolished the two-child benefit limit, a move welcomed by anti-poverty advocates. This policy, introduced by the Conservatives in 2017, restricts child tax credits and universal credit to the first two children in a family. The revision is estimated to cost the Treasury £3 billion by 2029-30 but is expected to reduce child poverty by 450,000.
In a significant development, the Chancellor outlined plans to raise £1.1 billion through gambling tax reforms. Starting April 2026, remote gaming duty will increase from 21% to 40%. Moreover, a new general betting duty for remote betting will be introduced in April 2027 at a rate of 25%, excluding certain types of betting activities.
Rail fares will be frozen for the first time in 30 years, providing savings of £600 million in 2026/27 for over a billion train journeys. Income tax thresholds will remain frozen for an additional two years until 2030, resulting in more individuals entering higher tax brackets as their incomes rise.
A mileage-based charge on electric and plug-in hybrid cars will be implemented from April 2028, projected to generate £1.4 billion for the Treasury. Additionally, households can anticipate a £150 reduction in energy bills from April, as part of efforts to alleviate the cost of living.
Pensioners are set to receive around £550 per year more as the state pension is due to increase from April, in line with earnings growth. The current state pension rate of £230.25 per week is expected to rise to over £240 per week next year.
The Chancellor confirmed a 5p fuel duty cut until September 2026, with a gradual reversal following that. Pay rises for approximately 2.7 million workers are scheduled from April, including an increase in the National Living Wage to £12.71 per hour for workers over 21 and a raise in the National Minimum Wage for 18 to 20-year-olds to £10.85 per hour.
Furthermore, national insurance contributions will be imposed on salary-sacrificed pension contributions, estimated to raise £4.7 billion annually. The Soft Drinks Industry Levy threshold will be reduced to 4.5g of sugar per 100ml to combat obesity, with a wider application expected from January 2028.
A reduction in the annual cash ISA limit to £12,000 for younger savers was confirmed, while over-65s remain unaffected with a £20,000 limit. A new tax on overnight stays is set to increase costs by £2 per night, with funds directed to regional authorities.
Lastly, an investment of £300 million in NHS technology was announced, along with funding for projects like the Lower Thames Crossing and various transport upgrades. Ms. Reeves emphasized the Labour Party’s commitment to enhancing the NHS and investing in critical infrastructure projects.