Personal taxes
- Rates of income tax and National Insurance (NI) paid by employees, and of VAT, to remain unchanged
- Income tax band thresholds to rise in line with inflation after 2028, preventing more people being dragged into higher bands as wages rise
- Basic rate capital gains tax on profits from selling shares to increase from from 10% to 18%, with the higher rate rising from 20% to 24%
- Rates on profits from selling additional property unchanged
- Inheritance tax threshold freeze extended by further two years to 2030, with unspent pension pots also subject to the tax from 2027
- Exemptions when inheriting farmland to be made less generous from 2026
Business taxes
- Companies to pay NI at 15% on salaries above £5,000 from April, up from 13.8% on salaries above £9,100, raising an additional £25bn a year
- Employment allowance – which allows smaller companies to reduce their NI liability – to increase from £5,000 to £10,500
- Tax paid by private equity managers on share of profits from successful deals to rise from up to 28% to up to 32% from April
- Main rate of corporation tax, paid by businesses on taxable profits over £250,000, to stay at 25% until next election
Wages, benefits and pensions
- Legal minimum wage for over-21s to rise from £11.44 to £12.21 per hour from April
- Rate for 18 to 20-year-olds to go up from £8.60 to £10, as part of a long-term plan to move towards a “single adult rate”
- Basic and new state pension payments to go up by 4.1% next year due to the “triple lock”, more than working age benefits
- Eligibility widened for the allowance paid to full-time carers, by increasing the maximum earnings threshold from £151 to £195 a week
Transport
- 5p cut in fuel duty on petrol and diesel brought in by the Conservatives, due to end in April 2025, kept for another year
- £2 cap on single bus fares in England to rise to £3 from January, outside London and Greater Manchester
- Commitment to fund tunnelling work to take HS2 high-speed rail line to Euston station in central London
- Government says it will “secure the delivery” of Transpennine rail upgrade between York and Manchester, after reports ministers were looking to cut costs
- Air Passenger Duty to go up in 2026, by £2 for short-haul economy flights and £12 for long-haul ones, with rates for private jets to go up by 50%
- Extra £500m next year to repair potholes in England
- Vehicle Excise Duty paid by owners of all but the most efficient new petrol cars to double in their first year, to encourage shift to electric vehicles
Drinking and smoking
- New flat-rate tax of £2.20 per 10ml of vaping liquid introduced from October 2026, as ministers shelve Tory plans to link the levy to nicotine content
- Tax on tobacco to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco
- Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, but tax on draught drinks cut by 1.7%
- Government to review thresholds for sugar tax on soft drinks, and consider extending it to “milk-based” beverages
Government spending and public services
- Day-to-day spending on NHS and education in England to rise by 4.7% in real terms this year, before smaller rises next year
- Defence spending to rise by £2.9bn next year
- Home Office budget to shrink by 3.1% this year and 3.3% next year in real terms, due to assumed savings from asylum system
- £1.3bn extra funding next year for local councils, which will also keep all cash from Right to Buy sales from next month
Housing
- Social housing providers to be allowed to increase rents above inflation under multi-year settlement
- Discounts for social housing tenants buying their property under the Right to Buy scheme to be reduced
- Stamp duty surcharge, paid on second home purchases in England and Northern Ireland, to go up from 3% to 5%
- Point at which house buyers start paying stamp duty on a main home to drop from £250,000 to £125,000 in April, reversing a previous tax cut
- Threshold at which first-time buyers pay the tax will also drop back, from £425,000 to £300,000
- Current affordable homes budget, which runs until 2026, boosted by £500m
UK growth, inflation and debt
- Office for Budget Responsibility (OBR) predicts the UK economy will grow by 1.1% this year, 2% next year, and 1.8% in 2026
- Inflation predicted to average 2.5% this year, 2.6% next year, before falling to 2.3% in 2026
- Official definition of UK government debt loosened by including a wider range of financial assets, such as future student loan repayments
- Budget policies will increase UK borrowing by £19.6bn this year and by an average of £32.3bn over the next five years, according to the OBR
Other measures
- £11.8bn allocated to compensate victims of the infected blood scandal, with £1.8bn set aside for wrongly prosecuted Post Office sub-postmasters
- Government to stop receiving surplus cash from pension scheme for mineworkers
- Extra spending in England will lead to £3.4bn more for Scotland, £1.7bn more for Wales, and £1.5bn more for Northern Ireland in devolution payments
Support for SEIS, EIS and VCT continues to receive government backing offering important tax relief to early-stage investors and encouraging further investment into UK Innovation.
The ISA system were left untouched in the budget. The Treasury set out that annual subscription limits will remain at £20,000 for individual savings accounts, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and child trust funds until 5 April 2030.
Reeves also confirmed Labour’s decision to scrap the British ISA (that would have provided an additional £5,000 of tax free investing), which had been announced by former Chancellor Jeremy Hunt at the Spring Budget in March.
(Source: BBC)