Budget holds few surprises after Chancellor’s plans are leaked early

Chancellor Rachel Reeves has revealed a raft of tax hikes totalling a reported £26billion in her Autumn Budget – but there were few surprises as a blunder leaked the details before she had made her budget speech.

Fiscal watchdog the Office for Budget Responsibility (OBR) published its response and forecast in reaction to the Budget measures announced an hour before the Chancellor presented her Budget to the House of Commons.

In any event the headline measures had all been trailed well ahead of time and were widely expected, as the Gazette reported yesterday, so even without the leak there was no real surprise.

Income tax thresholds – the amount of income at which you pay different rates of income tax – will stay frozen until 2031, three years longer than previously planned.

This means a pay rise could pull workers into a higher tax bracket or see a greater proportion of their income taxed than previously. With the State Pension being increased by £550 in April, it will also put pensioners very close to the personal income allowance threshold of £12,570 – meaning any further income would put them into the 20% basic rate tax bracket.

Above £50,270 the tax rate increases to 40% and above £125,140 it goes up to 45%.

Another measure widely touted in advance and confirmed today was cash ISAs will see the amount savers can deposit in a year tax free reduced from £20,000 to £12,000 for those aged under 65 – it will stay at £20,000 for the older age group.

The theory is savers will be encouraged to put more money in stocks and shares ISAs or other investment products that will help boost the UK economy, although some analysts are dubious as to how much additional money this measure will actually raise.

The Chancellor announced electric vehicle (EV) owners and hybrid vehicle drivers will be taxed for using the road from 2028.

EV drivers will be charged per mile at a reported three pence a mile, on top of other road taxes.

Fuel duty will continue to be frozen for five months from April, followed by a staged increase from September 2026.

The National Living Wage and the National Minimum Wage will both increase in April, which had already been previously announced.

Workers aged 21 and over on the National Living Wage will receive £12.71 an hour, up from £12.21.

For those aged 18, 19 or 20, the National Minimum Wage will increase to £10.85 an hour, up from £10.

For 16 and 17-year-olds the minimum wage will rise to £8 an hour, up from £7.55.

A separate apprentice rate which applies to eligible people aged under 19 - or those over 19 in the first year of an apprenticeship – will also increase to £8 an hour, from £7.55.

Also widely speculated in advance, Ms Reeves has confirmed there will be a ‘mansion tax’ on properties valued at £2million or more in England, with an extra council tax surcharge form April 2028.

There will be four price bands with the surcharge starting at £2,500 for a property valued in the £2m to £2.5m band, to £7,500 for a property valued in the highest band of £5m or more.

People who pay into their workplace pension via a ‘salary sacrifice’ scheme will now see that capped at £2,000 per year from April 2029.

This works by employees giving up a portion of their salary in return for their employer paying the equivalent amount into their pension. The benefit to both until now was that they made savings in national insurance.

After 2029, workers can still pay in more to their pensions, but it will be taxed.

Who will be better off?

On the ‘positive’ side of the Budget, the Chancellor announced a raft of measures she said would help squeezed families tackle the cost of living.

Some levies placed on energy bills will go, giving householders and additional £150 a year to ease pressure on family finances and help lower inflation. Poorer households will save up to £300 when combined with the Warm Homes Discount.

Regulated rail fares in England will be frozen until March 2027 - the first time they have been left unchanged for 30 years.

These fares include season tickets covering most commuter routes, some off-peak return tickets on long-distance journeys and flexible tickets for travel in and around some cities.

This only applies in England and only to services run by England-based train operating companies. Train operators are still free to set prices for unregulated fares but it has been claimed this move will save commuters £300 a year.

Prescription charges will be frozen at £9.90 per item.

The two-child cap on universal credit or tax credits benefits will be scrapped from April, meaning parents with three or more children will be able to claim more.

Some benefits, including main disability benefits such as personal independence payment (PIP), attendance allowance and disability living allowance, as well as carer's allowance will rise by 3.8% in April.

There will be changes to universal credit in April, following controversial announcements made earlier by the government which will increase the basic standard amount of UC but see new claimants with disabilities or health conditions typically receive lower amounts of the additional payments they are entitled to.