Chancellor Rachel Reeves has delivered her first Budget, announcing a series of tax rises and spending measures aimed at closing a £22bn 'black hole' in public finances. The Budget was overshadowed by an accidental early release of the Office for Budget Responsibility's (OBR) assessment, which Shadow Chancellor Mel Stride called 'outrageous'. Reeves described the leak as 'deeply disappointing' but pressed on with her statement.
Key tax measures include a three-year freeze on income tax and national insurance thresholds from 2028, a move Reeves admitted would 'affect working people' but argued would ensure the wealthiest contribute most. Headline rates of income tax, VAT, and national insurance remain unchanged, which Reeves said keeps Labour's manifesto pledge not to raise taxes on working people. The freeze is expected to drag millions into higher tax bands, raising significant revenue.
From April 2028, properties worth over £2m will face a council tax surcharge of £2,500 a year, rising to £7,500 for those over £5m. This 'mansion tax' fulfils a long-standing Labour demand, though revenue is expected to be modest. From April 2029, a £2,000 cap will be imposed on pension contributions shielded from national insurance via salary sacrifice, raising an estimated £4.7bn. The annual Isa limit will be cut from £20,000 to £12,000 from April 2027, with a consultation on a new first-time buyer Isa product.
Reeves also announced trade deals with the US, India, and the EU, planning reforms, visa system changes, and a shift in fiscal rules to boost public investment to a four-decade high. She reiterated her commitment to no return to austerity, cutting the cost of living, and reducing debt and borrowing. The Budget aims to fund the NHS and other public services while balancing the books through tax rises rather than spending cuts.
