How the Budget will affect everyday folks
Chancellor Rachel Reeves’ Autumn Budget will hit middle earners hardest, while the very richest and poorest are set to be comparatively unscathed.
Most ordinary British taxpayers will feel squeezed, rather than shocked, over the next few years after income tax and National Insurance contributions (NICs) thresholds were frozen.
This is expected to create a “fiscal drag” that will make the average British taxpayer £600 a year poorer by 2029.
1.7m workers face higher taxes as wages rise
By 2029 an extra 1.7 million workers will pay higher or additional-rate tax as wages grow while thresholds don’t.
Employer NICs on salary-sacrifice pensions will quietly reduce many people’s take-home pay or force employers to cut pension contributions.
Savers face lower annual tax-free ISA limits and a 2% tax hike on savings interest and dividends.
Renters and buy-to-let landlords get hit by higher taxes on rental income.
Electric car drivers to be charged per mile
Electric car owners will eventually pay a new per-mile charge. The only direct relief is another temporary fuel-duty freeze..
Reeves presented her Budget shortly after the Office for Budget Responsibility (OBR)’s report on it was accidentally leaked, revealing most key measures in advance.
Reeves claims to have more than doubled her fiscal headroom to £21.7 billion. The OBR said her tax measures will eventually raise £26.1 billion a year by 2029-30 by offsetting spending commitments and reducing borrowing.
£14.9bn of personal taxes
Of a total clutch of tax increases promising to net £26.1bn a year by 2029-30, $14.9bn will be in personal taxes that will impact everyday folks, including:
- income tax and employer NIC thresholds frozen for another three years from 2028–29 (to raise £8.0 bn).
- employer NICs extended to salary-sacrifice pension contributions (£4.7 bn).
- 2% increase in tax rates on dividends, rental income and savings income (£2.1 bn).
- cash ISA annual allowance cut to £12,000 for under-65s.
Reducation on coproation tax capital allowances
Other measures include:
- reduction in corporation tax capital allowances (£1.5 bn).
- new pay-per-mile charge for electric and plug-in hybrid vehicles from April 2028 (£1.4 bn).
- gambling tax reforms (£1.1 bn).
- reduced capital gains tax (CGT) relief for sales to employee ownership trusts (£0.9 bn).
- council tax surcharge on homes worth £2 million+ (£0.4 bn).
Badenoch slams Reeves
https://x.com/kemibadenoch/status/1993746286961676634?s=46
Conservative Party leader Kemi Badenoch, reacting to Reeves’s Budget, said: “Last year she put up taxes by £40bn, the biggest tax raid in British history.
“She swore it was a one-off. Today she has broken every single one of those promises.
“If she had any decency she would resign.”
