More than 1.7m people will face paying more income tax after Chancellor Rachel Reeves announced a three-year extension to the freeze on thresholds that will see some workers dragged into paying the tax for the first time and others shifted into higher bands as earnings increase. It means the income tax personal allowance will remain at £12,750 until 2030/31, while the higher rate and additional rate thresholds will remain at £50,270 and £125,140, respectively. The freeze in thresholds will result in 780,000 more basic-rate, 920,000 more higher-rate, and 4,000 more additional-rate income tax payers in 2029/30. The policy, which applies to income tax and National Insurance contributions, will pull in £8.3bn for the Treasury in 2029/30. Chris Etherington, a tax partner at RSM UK, warned: “Those who may not have considered that they would ever be higher-rate taxpayers at the start of the decade could suddenly find themselves in that camp by the end of it.” Shaun Moore, a tax and financial planning expert at Quilter, said the freeze has already had an impact on Britons’ incomes – and this will “only get worse.”

Under measures set out in the Budget, dividend tax rates will increase by two percentage points for basic and higher rate taxpayers as of April 2026. Basic rate taxpayers will see their rate rise to 10.75%, while higher rate taxpayers will face a 37.75% charge. This change is expected to generate £1.2bn annually from 2027/28. Meanwhile, additional rate taxpayers will continue to face a rate of 39.35%. Commenting on the changes, Jason Hollands, managing director at Evelyn Partners, said: “The last thing the UK really needs right now is more tax on investment and entrepreneurship.” Michael Healy, UK managing director at investment platform IG, said: “Dividend tax changes might look like a quick and painless way to raise revenue, but an increase will hurt millions of people and undermine the Government’s own ambition to build a nation of investors.”

Starting in 2028, owners of properties in England valued over £2m will face a new annual surcharge of at least £2,500, with the Chancellor having confirmed details of the so-called mansion tax in the Budget. This charge will be in addition to existing council tax and will vary based on property value, with the highest band for homes worth £5bn or more incurring a £7,500 fee. Properties will be assessed based on 2026 valuations provided by the Government’s Valuations Office Agency. The Office for Budget Responsibility estimates this tax will generate £400m annually by 2029/30. Economists at the Institute for Fiscal Studies warned: “We now have a council tax system based on 1991 values, with a new complicated bolt-on for high-value houses based on what the house is worth today.”

The Government has announced measures designed to close the tax gap, with ministers targeting an additional £10bn in revenue by 2029/30. Chancellor Rachel Reeves announced new compliance powers for HMRC to combat tax evasion, which cost £5.5bn in 2022/23. A US-style whistleblower scheme will reward informants who report tax fraud. Lloyd Firth, a partner at law firm WilmerHale, said the initiative is a “welcome and very positive development,” saying that it could make lobbying for changes in other enforcement agencies “that much easier.” The Government will also enhance enforcement against illicit activities and disqualify rogue directors abusing insolvency processes. Chris Denning, a tax partner at MHA, has called for “practical” measures to target evasion, “including reviewing our very complex tax code.”

Rachel Reeves has increased the tax burden on Britons to a record high. The Chancellor’s Budget forecasts a tax-to-GDP ratio of 38.3% by 2030/31, largely due to 24 new taxes or rises. This takes the tax-to-GDP ratio to the highest level in more than 300 years of official records. The Treasury is set raise an extra £30bn a year by 2030/31 – including £12.7bn from extending the freeze on tax thresholds for another three years. The Office for Budget Responsibility calculates that the freeze on tax thresholds will lead to 5.2m more taxpayers by 2030. It also noted that around two-thirds of the increase in the tax take since 2019/20 comes from rising personal taxes.

Rachel Reeves has announced the removal of tax breaks for home workers, effective from April. The Government will remove the deduction from income tax for non-reimbursed home working expenses. Employers can still reimburse eligible costs without tax deductions. Basic-rate taxpayers could claim up to £62.40 annually, while higher-rate and top-rate taxpayers could claim £124.80 and £140.40, respectively. Millions of workers claimed this relief during the pandemic and many continued to benefit even after returning to the office.

SMEs are facing increased financial pressures following the Budget. Key changes include rising dividend taxes and the extension of a freeze on income tax thresholds until 2030/31, which will push more workers into higher tax bands. Sarah Farrow from EY noted that these measures could deter passive investment. Tom Russell, president of restructuring body R3, said: “It is likely that SMEs will share the pain of freezing income tax brackets,” adding: “With pressure on both the demand side and a need to pay higher wages, margins shrink and some will become targets for opportunistic local competitors or trade buyers.” Experts have also suggested that the two percentage point increase in dividend taxes deter people from starting a business, with the Federation of Small Businesses saying it makes investment in your own business “one of the least tax-friendly things you can do with your money.”

Chancellor Rachel Reeves has been criticised for her business rates reform, which increases bills for small businesses while reducing them for large supermarkets. Despite promises to level the playing field, many small firms will see only a minimal cut in their rates. Andrew Goodacre, chief executive of the British Independent Retailers Association, called the situation “somewhat perverse,” saying: “The large guys are going to pay less and the small guys are going to pay more, it’s ridiculous.” Emma McClarkin, chief executive of the British Beer and Pub Association, warned that rising costs could threaten the survival of pubs and jobs, while Tina McKenzie from the Federation of Small Businesses suggested that the measures “will not help small firms.”

The Office for Budget Responsibility (OBR) has revised its economic growth forecasts, indicating slower growth for the UK over the next five years. The OBR now predicts 1.5% growth in gross domestic product (GDP) for this year, up from a previous forecast of 1%. However, it has downgraded growth in 2026 from 1.9% to 1.4%, in 2027 from 1.8% to 1.5%, in 2028 from 1.7% to 1.5% and in 2029 from 1.8% to 1.5%. The OBR forecasts that borrowing will be £21bn higher this year than previously expected. While the borrowing forecast has been increased for the following three years, the OBR expects it to be £6bn lower by 2029/30. OBR data also shows that borrowing for 2024/25 was £12bn more than previously thought. The OBR report said that while the Budget “addresses some fiscal risks and increases the margin held against the Government’s fiscal targets, it still leaves the UK public finances relatively vulnerable to future shocks.”

Chancellor Rachel Reeves has introduced a three-year stamp duty holiday for new companies listing in London. This removes the 0.5% tax on shares purchased in newly listed firms for three years following the IPO. Dame Julia Hoggett, CEO of the London Stock Exchange, welcomed the move, saying that it acknowledges the “vital role equity markets play in driving investment, innovation, and job creation,” adding that it is “an important first step in removing the distorting effects of this duty which has historically disincentivised investment in UK companies, especially for retail investors.”

A £2,000 cap on salary sacrifice pension contributions will be introduced in April 2029, the Chancellor has announced, limiting the earnings an employee can exchange for pension contributions and benefit from a National Insurance exemption. The Treasury says three-quarters of basic-rate taxpayers using salary sacrifice – and their employers – will be unaffected by the change. Alice Jeffries, head of tax policy at the Confederation of British Industry, has warned that the pension change will “add significant cost to employing staff.” Shevaun Haviland, director general of the British Chambers of Commerce, said: “Some firms, especially larger ones, will be worried about the changes to salary sacrifice,” while Craig Beaumont, executive director at the Federation of Small Businesses, noted that some smaller firms are still likely to be hit.

The Government’s decision to maintain the energy profits levy (EPL) has drawn sharp criticism from the oil and gas sector. Chancellor Rachel Reeves confirmed the levy will not be scrapped, despite concerns it discourages investment and threatens jobs. Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, said jobs will be lost “as a direct result of this Government’s failure to act,” while Scottish Finance Secretary Shona Robison noted the negative impact on employment in Scotland.