In a landmark statement to the House of Commons, Chancellor Rachel Reeves has delivered her first budget with a stark warning that Britain must face "tough decisions" to repair the nation's finances. The Labour minister declared that "the age of irresponsibility is over" as she unveiled significant tax increases targeting wealthy individuals and private institutions.
Private Schools Face VAT Hammer Blow
The most anticipated measure sees private schools losing their VAT exemption, a move that could add approximately 20% to school fees. This controversial policy has sparked fierce debate about its potential impact on state school admissions and the financial viability of smaller independent institutions.
Non-Dom Tax Status Abolished
In another major revenue-raising measure, the Chancellor confirmed the abolition of the non-dom tax status, fulfilling a key Labour election pledge. This will end the favourable tax treatment for UK residents whose permanent home is abroad, potentially affecting thousands of wealthy individuals.
Private Equity and Carried Interest Targeted
The budget also takes aim at the private equity sector, with plans to increase taxes on carried interest - the share of profits that fund managers receive. This forms part of what Reeves described as making "tough but necessary" choices to stabilise the economy.
Economic Inheritance from Conservatives
Reeves didn't mince words about the economic situation she inherited, stating the country faces the worst financial circumstances since World War II. She emphasised that previous governments had left public services "on their knees" and public finances in disarray.
Political Fallout and Response
The budget has drawn immediate criticism from Conservative MPs and private school representatives, who argue the VAT changes will overwhelm state schools and damage educational choice. However, Labour maintains these measures are essential for funding crucial public services and creating a fairer tax system.
The Chancellor concluded by framing these tax rises as necessary medicine for an economy battered by years of instability, positioning this budget as the first step in Labour's long-term economic rebuilding programme.
