Chancellor Rachel Reeves has confirmed sweeping tax increases totalling £26bn in a budget accidentally leaked early by the Office for Budget Responsibility. Despite the rise in taxes, she declared the measures would cut living costs for millions, including ending the two-child benefit limit and reducing energy bills.
Reeves said she was 'asking everyone to make a contribution' as she announced a three-year freeze on income tax thresholds, meaning one in four workers will pay the higher rate by 2030. Other revenue-raising measures include a £2,000 cap on tax-free pension contributions from 2029, higher gambling taxes, a new mileage charge on electric vehicles, and a high-value council tax surcharge in England, dubbed a 'mansion tax'.
The chancellor committed to removing the two-child benefit cap, lifting 450,000 children out of poverty, and scrapping the 'rape clause' requiring women to prove non-consensual conception. She described the policy as a 'grotesque indignity' and said she would not tolerate the status quo that punishes children for their circumstances.
Despite the tax rises, Reeves built £22bn of fiscal headroom to meet her self-imposed rules, reversing a projected £4bn shortfall. The OBR said the measures would cut inflation by 0.3 percentage points next year. She also announced a £150 reduction in energy bills by removing green levies and freezing fuel duty.
