THE BUDGET WINNERS AND LOSERS: HOW MUCH YOU'LL PAY IN RACHEL REEVES £30BILLION TAX RAID
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Millions will be clobbered after Rachel Reeves unveiled £30billion of tax rises in her second bruising budget.
While the Chancellor previously vowed to exclude 'working people' from tax hikes, she changed her tune today by telling MPs she was asking everyone to 'contribute'.
And contribute they will, with most Britons set to be worse off as a result of Labour's tax rises - with middle-class families bearing the brunt.
Meanwhile, welfare handouts will be lifted across the board and the two-child benefits cap lifted altogether, prompting Kemi Badenoch to brand the package a 'Budget for benefits'.
There are a small number of other winners, including state pensioners, low-paid workers and train passengers.
Here's how you could be affected -
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LOSERS
Workers and firms who use salary sacrifice
Cost: £450 for someone earning £100,000
Salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from national insurance from April 2029.
The widely trailed move is a major blow for workers who use the schemes, as well as their employers. It will also deepen the gulf between private sector pensioners and their public sector counterparts.
Hargreaves Lansdown predicts the change will cost £75 per year for a employee earning £50,000 and contributing 5 per cent of their salary. This will rise to £450 for one earning £100,000.
The hit to employers will be far higher and raises the risk they will respond by slashing their own pension contributions.
'This could lead to employers limiting salary increases or opting against increasing their own contributions beyond auto-enrolment minimums,' said Helen Morrissey, Hargreaves Lansdown's head of retirement analysis.
'It's a move that could have huge impacts on people's retirements. A 22-year-old earning £25,000 per year receiving 3% per year as an employer contribution on top of their own 5% one would reach retirement with a pension pot of £226,000.
'However, if the employer had been able to boost their contribution to 5% the end result would be closer to £283,000..
The move is estimated to raise £4.7 billion in 2029/30 and £2.6 billion in 2030/31. At the moment, there is no limit.
Earners
Cost: £8,165 by 2031 for someone on £50,000
More workers will be dragged into higher tax bands after the Chancellor extended the deep freeze on thresholds by a further three years to 2031.
Freezing thresholds means that, as salaries rise over time, more people's incomes hit the higher rates, meaning they will pay more tax.
This will affect income tax, but also inheritance tax and capital gains tax.
It is a move which goes against the spirit of Labour's manifesto pledge not to raise the Treasury's largest revenue source.
Even if you're not pushed into a higher tax bracket, anyone whose pay increases over the next six years will end up paying more tax if they earn more than the personal allowance.
Hargreaves Lansdown has calculated that someone on £50,000 this year will pay £8,165 more in tax between 2020 and 2031 as a result of the extension.
Property owners
Cost: £2,500 a year on houses over £2million
Homes worth more than £2million face a 'surcharge' as the government bows to Labour demands to punish the 'wealthy'.
The annual levy will be £2,500 for those worth up to £2.5million.
And the highest band of £5million-plus will be hit with a £7,500 charge, uprated by inflation every year.
Although only around 100,000 properties are thought to be directly in the firing line, experts have warned of major impacts for the property market.
Over the next three years before the charge takes effect it is expected to cost the government £300million due to falling stamp duty revenue. After that it will only raise £400million annually.
It is also unclear whether the consequences will be felt far more widely.
The Chancellor is ordering a revaluation of Band F, G and H properties in England to facilitate the levy.
There are concerns that some of those properties could see their bands changed as prices have changed dramatically since 1991, the current baseline.
Experts have warned it will damage the property market at a time when the Government is looking to build 1.5million more homes.
Drinkers, smokers and gamblers
Cost: Duty rise adds 13p to a bottle of wine
Despite warnings about the fragile state of the hospitality sector - and concerns about inflation - the Chancellor has pressed ahead with an increase in alcohol duty across the board.
The Treasury will revert to the formula of raising alcohol duty in line with the retail prices index at 3.66 per cent.
This will add 11p on a bottle of Prosecco, 13p on a bottle of red wine and 38p for a bottle of gin from February 1 next year.
Tobacco duty will rise above inflation, which a new duty on vapes will be introduced next year as planned.
Miles Beale, chief executive of the Wine and Spirit Trade Association, called the alcohol duty increase 'typically disappointing and shortsighted'.
'Despite the OBR at last acknowledging higher prices lead to a decline in receipts, the Government fails to recognise that its own policy is driving up those prices,' he said.
'Amazingly, the Treasury continues to press ahead with its ill-founded plan to pile further duty increases on alcohol.
'Prices will rise once more for consumers, British businesses will suffer, and Treasury receipts will continue to fall – forecast to be £600million lower than last year and £1 billion lower than was forecast in March'.
MPs were told the tax on remote gaming will rise from 21 per cent to 40 per cent, and on online betting from 15 per cent to 25 per cent, while there are no changes for in-person gambling or horse-racing, and bingo duty is being abolished.
Savers and investors
Cost: Cash ISA allowance dropped by £8,000 per year
Ms Reeves has announced that £8,000 of the £20,000 tax-free ISA allowance must be invested in stocks and shares, capping the annual cash ISA allowance at £12,000, except for those who are over 65.
The Chancellor told MPs: 'From April 2027, I will reform our Isa system, keeping the full £20,000 allowance while designating £8,000 of it exclusively for investment, with over-65s retaining the full cash allowance.'
Harriet Guevara, Chief Savings Officer at Nottingham Building Society, called the decision 'deeply disappointing'.
'We support the Government's aim to boost an investing culture in the UK, but restricting choice is not the way to do it,' she said.
'At a time when financial confidence is already fragile, cutting the allowance sends a difficult message to households who are trying to do the right thing.'
The government will also increase tax rates on dividends, property and savings by two percentage-points.
Ms Reeves told MPs she was increasing the taxes on some sources of income which are taxed less as they don't have National Insurance social security payments charged on them.
'It's not fair that the tax system treats different types of income so differently,' she said.
'So I will increase the basic and higher rate of tax on property, savings and dividend income by 2 percentage points and the additional rate of tax on property and savings income by 2 percentage points.'
Ms Reeves claimed that 90 per cent of taxpayers will still pay no tax at all on their savings.
In one positive move for stock markets, the Chancellor has confirmed a three-year stamp duty holiday on shares bought in new UK flotations.
Motorists (despite a sop on fuel duty)
Cost: EV drivers to pay 3p a mile
A new mileage-based charge for EVs and hybrids from April 2028, raising £1.4billion;
Drivers of electric vehicles (EVs) will have to pay 3p per mile they drive under a new tax introduced by the Chancellor.
The move is in part to make up for falling revenues from fuel duty, as more motorists move towards using EVs.
A cut to fuel duty will be extended as a means of holding down the price of petrol at the pump.
The tax has been held at 57.95p since 2011, but the effective rate paid by drivers since 2022 has been 52.95p as a result of a 'temporary' 5p cut.
The 5p cut in fuel duty will remain in place until September 2026, when it will be reversed through a staggered approach.
Holidaymakers
Cost: Tourist tax of around £1 a night
Mayors in England have been handed new powers to charge guests staying overnight.
The tax could apply to visitors at accommodation providers including hotels, holiday lets, bed and breakfasts and guesthouses regardless of size or price.
It may be in the form of a fixed fee, such as £1 a night, or a percentage of the overall booking cost.
WINNERS
Large low-income families
Benefit: £14,000 a year
The two-child benefit cap has been axed, leaving around 18,000 large families in line to pocket an extra £14,000.
The OBR said 560,000 families are in line for extra cash, costing around £3billion a year.
Official figures show the Chancellor's flagship Budget plan will be worth more than £14,000 a year each to 18,000 low-income families with six or more children.
The benefit cap limits means-tested benefits such as universal credit and child tax credit payments to the first two children, costing affected families a typical £3,455 in lost benefits for each additional child.
Figures produced by the Department for Work and Pensions (DWP) show that 470,000 families are now affected by the policy.
Working-age benefits – including Universal Credit, Personal Independence Payments (Pip) and child benefit – will rise by 3.8 per cent in April.
Free school meals will be extended to cover households on Universal Credit in September 2026.
Additionally, the 'Help to Save' scheme, which was set to end in 2027, will be made permanent from 2028 by the Chancellor in the Budget.
It allows eligible savers to put in up to £50 per month for four years, and get a 50 per cent bonus paid by the Government.
Low-paid workers
Benefit: £700 for the average worker
The minimum wage will increase to £12.72 an hour next April for eligible workers aged 21 and over.
This will make a full-time worker £700 better off a year.
While the rise will be welcomed by low-paid workers, it represents a further cost to companies that may prompt them to reduce the number of staff they take on.
Train passengers
Benefit: £300 a year (according to Labour)
Rail costs were frozen in the Budget, which the Government has said will save commuters on pricier routes more than £300 a year.
The move only covers regulated fares, which include standard class fares such as saver returns, standard returns, off-peak fares between major cities and season tickets for most journeys.
The policy does not apply to 'unregulated' fares including first class, advance purchase and saver tickets – with train operators remaining free to determine those fares.
State pensioners
Benefit: £550 for those on new state pension
The new state pension will rise by 4.8 per cent as a result of the triple lock.
This increases the station based on September Consumer Price Index inflation, average earnings growth, or 2.5 per cent - whatever is higher.
Retirees on the full new state pension will be around £550 better off a year, while those who retired before April 2016 under the old state pension scheme will receive an extra £440.
The hike brings the full new flat-rate pension to £12,547 a year.
But if another increase follows in 2027, anyone receiving just the state pension will be taxed on their income as it will surpass the personal allowance of £12,570.
Anyone paying energy bills
Benefit: £150 a year (according to Labour)
The Chancellor said she was taking action to get energy bills down and cut the cost of living, with an average of £150 cut from the average household bill from next year.
Ms Reeves said she would do this by scrapping an 'eco scheme' introduced by the Tories in government, which she claimed had cost households £1.7 billion a year on their bills.
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