Chancellor Rachel Reeves has delivered a disastrous second budget, guaranteeing more than £30 billion in tax hikes and abandoning earlier assurances that “working people” would be protected from higher taxes.
Instead, he told MPs he was asking for “everybody to contribute”, and many households now live in the worst of circumstances even for a middle-income family with an active lifestyle.
While social security payments, pensions and the minimum wage will rise, a wider package of tax rises – combined with frozen thresholds – means millions will see their money lost further. Business owners have criticized the plans, calling them a “benefits budget”.
Below, a breakdown of how different groups will be affected.
Who loses time
Employees use salary sacrifice
One of the most important changes is the cap on the National Insurance Fruel for salaried pensioners. From April 2029, only $2000 of annual contributions will be issued – a sharp change from the current unlimited grant.
For someone earning $50,000 and contributing 5%, this equates to around £75 a year in additional tax; with enda £ 100,000 Endaner, around £ 450. Employers, and those who have lost NI relief, face very high costs and can respond by reducing their pension contributions.
Pension experts warn of long-term consequences. Harreeves Lansdowdown calculates that a 22-year-old who earns $25,000 could retire with $57,000 less if employer contributions are tighter because of the change.
They lead by attacking frozen thresholds
Reeves extended the freeze on income tax regimes until 2031, pushing more workers into higher tax brackets as wages rise. This also attracts more avats to the inheritance tax and more benefits to the capital gains tax.
According to the analysis, an employee on £50,000 this year will pay more than £8,165 more in tax between 2020 and 2031 because of the frozen bands.
Top property owners
Homes in England worth more than $2 million will face new charges of between £2,500 and £7,500 a year. The case, which is cheaper every year due to price increases, affects about 100,000 homeowners but is expected to have wide-ranging consequences.
To manage the levy, the chancellor re-orders funding for the renewal of fh bands, raising concerns expressed by many households set to be seen in 1991 will be run on high council tax bands. Property analysts warn they could put the market under pressure as the government tries to build 1.5 million new homes.
Drinkers, smokers and gamblers
Alcohol duties will rise in February in line with the RPI inflation rate – Adding 13p to a bottle of wine, 11p to Gin. Tobacco duty will rise above the premiums, and new VApe duty is always planned.
The gambling industry faces one of the watershed areas. The tax on internet gaming profits increases from 21% to 40%, and the internet betting activity jumps from 15% to 25%, although the bingo activity is abolished.
Savers and investors
Cash IsA allowances will be capped at £12,000 for 65s and under 65s from April 2027, with £8,000 allowances for a £20,000 hedged investment. The chancellor also increased tax on construction, savings income and income by 2 per cent, saying it was “not right” to get income to attract lower prices than to get income lower than wages.
Industry leaders called ISAs have moved to hit financial confidence at a time when households are trying to build buffers against debt.
Motorists – especially EV drivers
Electric car owners will face a new 3p-per-mile road tax from 2028 to make up for lost fuel mismanagement.
Meanwhile, Petrol and Diesel drivers get a temporary reprieve: The 5p Fuel cut is reduced until September 2026, before being phased out.
Hollis makers
Mayors in England will be given the power to bring power to visitors by staying overnight. The levy is expected to be £1 per night, although councilors will have flexibility in the final design.
The beneficiary
Large families on the lower floor
Reeves tore up the cap on the two-child benefit, which would have given large increases to large, low-income families. The OBR estimates 560,000 households will benefit, with around 18,000 households receiving more than £14,000 a year.
Universal credit, PIP, child benefit and other age-related benefits will rise by 3.8% in April. Free school meals will extend to all households on Universal Credit by 2026, and bailouts will end forever.
Low paid workers
The national living wage stands at £12.72 an hour, bringing the annual increase to £700 for a full-time worker. The rise is part of a long-term plan to introduce a single pay scale that is older than 18 years.
Train the riders
Rail control fees are frozen until 2025, a free-board freeze that has been frozen since 1996. Employee claims that go through certain routes will save more than £300 a year.
Pensioners
The State Pension rises by 4.8% under the triple lock, adding £550 a year to the new State Pension. Some retirees under the old scheme will receive £440. However, another increase could push pensioners who pay tax today more than the personal allowance of $12,570, creating new tax liabilities.
Households facing high energy bills
Reeves says the average householder will save £150 a year after belting out the encorvational-in Eco Leavy which incurs £1.7 billion annually in debt.
