Chancellor Rachel Reeves delivered the budget today, announcing an increase in day-to-day government spending by 1.5% and a 1.7% rise in overall spending. She confirmed that the freeze on income tax and national insurance thresholds will not be extended. Reeves unveiled the largest tax-raising budget in decades, with tax as a share of the economy reaching the second-highest level on record.
Reeves also announced the introduction of VAT on private school fees, a 40% relief on business rates for retail, hospitality, and leisure, and a 50% increase in air passenger duty for private jets. Additionally, a new tax on vapes will be implemented, and stricter rules on inheritance tax will raise over £2bn. The capital gains tax will also rise, with the lower rate increasing from 10% to 18% and the higher rate from 20% to 24%.
Employers’ national insurance will increase to 15%, raising £25bn a year, while the freeze on fuel duty will continue, providing a tax cut worth £3bn. The state pension will rise by up to £470, and HMRC will hire 5,000 extra compliance officers to enhance tax revenues. Reeves also announced a 6.7% increase in the national minimum wage and measures to crack down on welfare fraud, saving £4.3bn.
Overall, the budget focuses on fulfilling promises made during the election campaign, with a strong emphasis on investing in public services, supporting working people, and increasing tax revenues.
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