Big day: Chancellor Rachel Reeves will deliver her budget
Chancellor Rachel Reeves finally delivers her long-awaited fall tax and spending budget today.
She has set herself the task of plugging a £22 billion black hole in Britain’s public finances, fixing public services and reviving economic growth.
The first Labor budget in 14 years is expected to deliver the largest volume of tax increases in 30 years to fund additional spending on public services, and Reeves has already indicated that the government’s budget rules will be adjusted to allow more borrowing to to pay for investments.
The existing six-year freeze on personal tax thresholds is expected to be extended, pushing more people into higher income tax brackets, while the government has also eyed a major looming change to inheritance and capital gains taxes.
Pensions could be in the line of fire with a cut in the tax-free allowance, while Reeves could opt to include pension assets as liable for IHT and force employers to start paying National Insurance on pension contributions.
An ongoing row over VAT paid by private schools is threatening to come to a head, with the Chancellor also potentially pulling the trigger on a tax raid on the private equity sector. Employers’ national insurance contributions could rise by up to £20 billion.
The budget at a glance:
Reeves opens with promises to ‘repair the foundations of the British economy’ and revive growth.
‘The only way to achieve growth is to invest, invest, invest; there are no shortcuts,” she says.
- The Government will implement the ten recommendations from the OBR review, which will be made available later today
- Reeves outlines a compensation package intended for the infected blood and post office scandals
- In total, taxes will rise by £40 billion
- OBR projections expect GDP growth of 2, 1.8 and 1.5 percent over 2025, 2026 and 2027 respectively
- On inflation, the OBR says the CPI will average 2.5 percent this year, 2.6 percent in 2025, then 2.3 percent in 2026, 2.1 percent in 2027, 2.1 percent in 2028 and 2 percent in 2029.