The long overdue budget has now been delivered by the Chancellor of the Exchequer, Rachel Reeves.
The latest budget, delivered a raft of different changes, so let’s take a look at what was in the red briefcase and what this means for you:
- Income tax and National Insurance Contributions have all been frozen for an additional three years beyond 2028.
- A new tax surcharge for houses worth more than £2m and £5m will be introduced from April 2028.The rate for the £2m property will be set at £2,500pa and for a £5m home rate is set at £7,500 this will be collected additionally to Council Tax
- Energy bills will decrease by around £150 on average from April 2026
- Fuel duty has been frozen until September 2026
- From 2029, the National Insurance exemption will be limited to the first £2,000 per year on salary sacrifice pension contributions. After this figure, such contributions will no longer be exempt and as such will pay National Insurance on those contributions at the normal rates.
- ISA reform, whilst the limit remains at £20,000.Under the new budget £8,000 must be invested into Stocks and Shares with the remaining balance, £12,000 being cash, from April 2027. Over 65s, however, will retain the full cash allowance of £20,000
- Income from dividends will see a tax increase of 2% on from April 2026
- Income from Property & Savings will see a tax increase of 2% from April 2027
From April 2026, the National Living Wage is set to increase by 4.1% to £12.71ph for eligible workers who are 21 and over. The Minimum Wage is also set to increase by 8.5% for those aged 18 to 20, going from £10ph to £10.85ph. For workers aged 16-17 the Minimum Wage will go up 6% to £8ph from £7.55.
If you also travel via rail to get to work or for days out with your family then the Government has announced that regulated rail fares will be frozen until March 2027. Regulated rail fares include season tickets, anytime day, off-peak and super off-peak tickets.
Alongside this if you own an EV car or an EV Hybrid Car, driving anywhere in the UK is going to get more expensive as a new pay-per mile tax is introduced on EV car’s and EV Hybrid Cars. The rate is currently set at 3p per mile for EV’ car drivers and 1.5p for plugin-hybrid drivers.
Other factors in the Budget include:
- Abolishment of the means-tested 2 Child Benefit Cap from April 2026.
- Additional £50bn in 2029-2030 will be invested into the NHS
- Additional £5bn will be spent on defence in 2025 – 2026 along with an additional 2.6% of all GDP in 2027. Enabling our armed forces to keep the country safe and support NATO
- A new National Digital ID scheme will be rolled out by 2029, making it easier for citizens to use and access government services and clamp down on illegal working & immigration
Need help understanding how this could affect your mortgage? Whether you’re buying, remortgaging or reviewing your long term plans, I’m here to help you make the most informed decisions.