There’s a lot to digest from Chancellor Rachel Reeves’ latest Budget and this Sysum Howard Duggan blog rounds up the key points affecting you, your family and your business.
Property and council tax – The basic and higher rates of tax on property, dividend and savings income will go up by two percentage points each. There will be a high-value council tax surcharge for properties worth more than £2 million of £2,500 a year, rising to £7,500 for properties worth more than £5 million.
Income tax and national insurance – Reeves will freeze income tax and national insurance thresholds for another three years from 2028. This will bring more people into higher tax bands. Basic rates of income tax, VAT and national insurance will not go up.
Pensions – From 2029, there will be a £2,000 cap on salary sacrifice into a pension, with contributions above that taxed in the same way as other employee pension contributions. Removing tax benefits from salary sacrifice pension schemes is forecast to raise £4.7 billion, the Office for Budget Responsibility (OBR) says.
ISA reform – From April 6, 2027, the annual ISA cash limit will be set at £12,000, down from £20,000. In 2026 the government will publish a consultation on the implementation of a new ISA product to help first time buyers.
Fuel duty – Fuel duty has been frozen for another five months at least, until September 2026. It will go up with inflation after that, ending 15 years of freezes.
Electric vehicles – There will be new excise duty on electric cars, payable alongside vehicle excise duty, at 3p a mile for electric cars and 1.5p for plug-in hybrids, to help double funding for road maintenance in England.
National minimum wage – The minimum wage for 18- to 20-year-olds will go up from £10 to £10.85, while the living wage will go up from £12.21 to £12.71.
Welfare and apprenticeships – Reeves claims 15,000 people will get back into work due to reforms to universal credit. About £300 million of taxpayer subsidies will be removed for those using disability benefits to drive Motability vehicles – including imposing VAT on payments for higher-value cars and ending relief from insurance premium tax. There will be funding to make sure that apprenticeships are free for small and medium-sized enterprises.
Two-child benefit cap – “The biggest barrier to equal opportunity is child poverty,” says Reeves, as she abolishes the cap on child benefit, costing £3 billion by 2029-30.
Gambling duty – From April 2026, remote gaming duty (RGD), levied on online casinos, will rise from 21% to 40. Bingo duty of 10% is abolished. There will be a new online-only rate of general betting duty, which is levied on operators’ income from sports betting. High street bookies will still pay the current rate of 15% but for online, the duty will rise to 25%, with a carve-out for horse racing.
Business taxes – There will be an expansion of entrepreneurial investment schemes and relief for UK stock market listings, with a three-year exemption from stamp duty. A 40% allowance will allow businesses to write off more of their upfront investment costs. There will be permanently lowered business rates for 750,000 retail, hospitality and leisure businesses, paid for by higher rates on properties worth more than £500,000, used by “warehouse giants”. A figure of £4.3 billion of support will be available for properties that receive a large increase in their bill. Customs duty will apply to parcels of any value, to stop online retailers undercutting High Street retailers.
And finally…
- Capital gains tax relief on shares sold by business owners will be cut in half. The decision to restrict employee ownership trust capital gains tax relief from 100% to 50% comes because the scheme is on course to cost £20 billion, 20 times the original estimate.
- The Chancellor will exempt payments from the compensation scheme for the infected blood scandal from inheritance tax.
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