In a highly anticipated debut, Chancellor Rachel Reeves has delivered her first Budget with a stark warning: Britain faces "tough decisions" and tax rises are necessary to repair the nation's finances.
The Inheritance Tax Bombshell
In a dramatic revelation, the Chancellor confirmed she is proceeding with the Conservative's controversial inheritance tax cut - but with a crucial Labour twist. The threshold will rise from £325,000 to £500,000, yet agricultural and business relief will be slashed, effectively creating a tax rise for many wealthy families.
Triple Whammy of Tax Increases
Reeves unveiled three major revenue-raising measures:
- Private School VAT: Ending the VAT exemption for private schools, generating an estimated £1.6 billion
- Vaping Tax: Introducing a new levy on vaping products to align with cigarette duties
- Non-Dom Reform: Scrapping the non-dom tax status as previously announced
A Warning of Things to Come
The Chancellor delivered sobering news about the state of Britain's economy, revealing that Jeremy Hunt's spending plans would have required £22 billion of cuts to public services. "We face a legacy of the worst growth since the Great Depression," Reeves told Parliament, emphasising the need for fiscal responsibility.
What Wasn't in the Budget
In a move that will disappoint some Labour backbenchers, Reeves confirmed there would be no immediate increases to capital gains tax or council tax. The widely anticipated mansion tax also failed to materialise, suggesting a cautious approach to wealth taxation.
The Economic Context
The Office for Budget Responsibility delivered a grim assessment, projecting that public debt would continue rising as a percentage of GDP under existing plans. This constrained the Chancellor's ability to make significant spending announcements without corresponding revenue measures.
Reeves concluded with a sober message: "This is the inheritance of the British people. And we must be honest about that." The Budget marks the beginning of what promises to be a challenging period of fiscal consolidation for the new Labour government.
