Millions are being clobbered with £40billion in tax rises during Rachel Reeves’ bruising first Budget today.
While the Chancellor vowed to exclude ‘working people’ from tax hikes, this political sophistry is fooling no one – with nearly all Brits set to be worse off in one form or another.
From pension holders to investors, smokers to jobseekers, the list of losers from today’s Budget is long.
But there are a small number of winners, including low earners who could see a £1,400 pay rise thanks to a hike in the minimum wage, while drivers have been spared a feared hike in fuel duty.
Below, MailOnline reveals how much more you will pay –
LOSERS –
Business owners: National insurance and minimum wage hikes clobber firms
Cost to you: If you’re an employee, nothing now – but it’s likely to have a knock-on impact
As part of a £25billion tax raid, the Chancellor today announced a slashing of the threshold at which employers begin making NICs from £9,100 to £5,000 from April.
She also used her Budget to hike the rate at which employers pay NICs by 1.2 per cent to 15 per cent.
NICs will not be increased for employees after Ms Reeves vowed not to target ‘working people’ and instead hit firms in order to raise revenues.
But, in a furious backlash at the move, senior industry figures said it would bring growth to a ‘grinding halt’, threaten an uptick in unemployment, and risk dampening wage rises.
Employers are also facing increased costs from April next year after Ms Reeves’ announced inflation-busting increases to both the National Living Wage and National Minimum Wage.
Tina McKenzie, policy chair of the Federation of Small Businesses (FSB), said: ‘The true test of today’s Budget will be whether small businesses can grow and end the economic stagnation the UK has been stuck in.
‘Larger small, and medium-sized, businesses will struggle with the rises on employer national insurance on top of the large costs from the Government’s employment law plans.
‘We’ve been very clear in our warning of the difficulty SMEs will be confronted with in meeting all of these changes at once – and the potential impact on jobs, wages and prices.’
Investors and entrepreneurs: Capital gains tax hiked
Cost to you: £280 for someone earning £70,000 who sold £30,000 worth of shares for a £10,000 profit
The lower rate of capital gains tax will rise from 10 to 18 per cent and the higher rate of 20 per cent to 24 per cent.
CGT is charged on profit from selling an asset that has increased in value, such as stocks that are not held in an ISA, or a second home.
The tax applies to individuals, but also to company owners, partners in a business, and self-employed people, among others.
Ms Reeves said the relief for people selling their businesses will be held at 10 per cent this year, rising to 14 per cent in 2025 and 18 per cent in 2026.
The lifetime limit for business asset disposal relief will stay at £1 million, she added.
The Chancellor said that, despite the rises, the UK will still have the lowest CGT rate of any European G7 economy.
Ms Reeves said: ‘We need to drive growth, promote entrepreneurship, and support wealth creation … while raising the revenue required to fund our public services … and restore our public finances.’
Sarah Coles, head of personal finance at investment firm Hargreaves Lansdown, said the increase ‘makes investment less attractive for newcomers’.
She added there is ‘a danger this will drive investor behaviour’ and that some people may choose to ‘hoard’ assets rather than cashing in and paying higher taxes.
Reports in the run-up to the Budget had led to speculation that the CGT rate could be raised as high as 39 per cent.
Parents with children at private schools: VAT exemption axed
Cost for you – £3,300 to parents paying the annual average of £16,656
Starting in the new year fee-paying schools will no longer be exempt from the tax, and from April will get no business rate relief, as the government looks to fund 6,500 extra teachers for state schools.
Critics of the plan have argued that the change is coming in too fast and could force some schools to close as parents pull their children out due to higher fees.
There are also fears of the impact on special needs schools, military children, and the effect of extra pupils entering the state system in the middle of the academic year.
Currently, independent schools do not have to charge 20 per cent VAT on their fees because there is an exemption for the supply of education.
The French and German ambassadors to the UK have also called for international to be excluded.
The chancellor says the single bus fare cap applied to many routes in England will be raised from £2 to £3 – as first revealed by Prime Minister Keir Starmer on Monday – extending it for a further year until December 2025.
The cap was introduced under the previous Conservative government and was due to expire at the end of December.
Wealthy pensioners: Blow as pensions become liable for inheritance tax for the first time
From 2027, the value of pensions pots will be included in estates and caught in the net of inheritance taxes.
This means thousands of grieving families will be dragged into paying the dreaded death duty for the first time at a rate of 40 per cent.
The Chancellor has also closed several IHT tax loopholes that investors, family business owners and farmers enjoy, making it more difficult to pass money down to the next generation.
This includes reform to agricultural property relief and business property relief.
From April 2026, the first £1million of combined business and agricultural assets will continue to attract no inheritance tax at all.
But for assets over £1million, the Chancellor said inheritance tax will apply with a 50 per cent relief at an effective rate of 20 per cent.
Families can still pass on up to £325,000 after death free of inheritance tax – known as the nil-rate band. The Chancellor has extended a freeze on the nil-rate band by two years until at least 2030. The threshold has been frozen since 2009.
Millionaires: Non-dom axe confirmed
Ms Reeves confirmed the Government will abolish the non-dom tax regime from April 2025.
She said: ‘In our manifesto we made a number of commitments to raise funding for our public services.
‘First, I have always said that if you make Britain your home, you should pay your tax here.
‘So today, I can confirm, we will abolish the non-dom tax regime and remove the outdated concept of domicile from the tax system from April 2025.’
David Lesperance, a leading tax and immigration adviser, said the details of the announcement were in some ways worse than expected and would prompt many non-doms to leave the UK.
‘There will be a mad rush to the exits before April Fools Day as high net worth UK taxpayers flee The Nightmare from Number 11 Downing Street,’ he told MailOnline.
‘Those UK taxpayers with significant capital gains dodged a bullet as no Exit Tax was announced. However, they are still within the target of the Chancellor in future budgets.
‘This Damocles Sword combined with a significant increase in capital gains tax rates as of April 2025 will predictably result in an exodus as taxpayers look to avoid not only higher rates, but any capital gains hit.
‘Carried interest tax rates are also increasing. This combined with the ability of those with carried interest to make and maintain their wealth outside of the UK, means that Golden Geese from the City will fly to more tax-friendly locations.’
Vapers and smokers: New duty introduced for vape fluid
Cost for you – £1.40 more for a bottle of vape liquid and 54p more for 20 cigarettes
Labour ramped up its war on vapers today after Ms Reeves announced a new flat rate duty on all e-cigarette liquid in her Budget speech.
The Government will roll out a new flat rate duty on all vaping liquid from October 2026.
And the Chancellor revealed a 10 per cent hike on hand-rolling tobacco would be implemented this year.
The new vaping levy follows a previous pledge by the Conservative government to do so, with the latest increases coming into effect from April 2026. ahead of a planned ban of single-use disposable e-cigarettes next June.
It will introduce a toll of £1-3 per 10ml vape liquid, increasing depending on nicotine levels. Experts warned it would see the average UK vaper spending almost £73 a year on the habit, with the cost of a £4 e-liquid bottle swelling to £5.40.
According to Treasury figures smokers can expect to pay 54p more for a packet of 20 cigarettes, while 30g of rolling tobacco will have an extra £2.32 added to the price.
There will also be a 27p jump per 10g of cigars, a 35p rise for 30g of pipe tobacco and a price increase of 13p for a 6g pack of heating tobacco – a move that will be a bitter pill to swallow for smokers.
Bus passengers: Fare cap rises to £3
Cost for you – Up to £1 per journey
Millions of Britons face soaring travel costs with Labour pushing ahead with an increase in the bus fares cap in England from £2 to £3.
Ms Reeves confirmed the move in the Budget despite warnings she is hammering lower-paid workers with a 50 per cent hike.
The £2 bus fare cap, which had been in place since January 2023, will be replaced by a new £3 cap until the end of 2025.
Critics have branded Labour’s decision to increase the cap – first announced by the Prime Minister on Monday – as a ‘bus tax’ and said it would impact on ‘working people’ across the country.
Train travellers: Fares and railcards hiked
Cost for you – £1.38 more for a ticket currently costing £30
Regulated train fares in England will increase by up to 4.6 per cent next year and the price of most railcards will rise by £5
The increase in fares is one percentage point above July’s Retail Prices Index (RPI) measure of inflation, which until 2023 was used by Westminster governments to set the cap on annual rises in regulated fares.
A Budget document published by the Treasury stated that the 4.6 per cent rise will be ‘the lowest absolute increase in three years’.
Changes to fares will come into force on March 2, 2025.
About 45 per cent of fares on Britain’s railways are regulated by the Westminster, Scottish and Welsh Governments.
They include season tickets on most commuter journeys, some off-peak return tickets on long-distance routes, and flexible tickets for travel around major cities.
Train operators set rises in unregulated fares, although these are likely to be very close to changes in regulated ticket prices because the companies’ decisions are heavily influenced by governments due to contracts introduced because of the coronavirus pandemic.
The Budget document also stated that the Government will ‘agree’ to a £5 increase in the price of most railcards ‘subject to an industry proposal’.
The railcard for disabled passengers will be unchanged.
The Treasury said railcards, which generally cost £30 per year, save users an average of ‘up to £158’ annually.
Air passengers: Duty rises (and it’s even worse if you have a private jet!)
Cost for you – £2 on the cost of an economy ticket for a short-haul flight
Air passenger duty (APD) will rise, adding up to £2 to the cost of an economy ticket for a short-haul flight, while private jet users will suffer a 50 per cent hike.
APD rates are based on the length of the flight and the class of cabin.
For passengers travelling in economy, they are £7 for a domestic flight, £13 for a short-haul flight, and £88-£92 for a long-haul flight.
Those in premium cabins are charged £14 for a domestic flight, £26 for a short-haul flight, and £194-£202 for a long-haul flight.
Private jet passengers currently face an APD rate of £78 for domestic or short-haul flights, and £581-£607 for long-haul flights.
Ms Reeves mocked Tory leader Rishi Sunak as she joked his ‘ears have pricked up’ when she mentioned APD.
The Chancellor told the Commons: ‘Air passenger duty has not kept up with inflation in recent years so we are introducing an adjustment, meaning an increase of no more than £2 for an economy class short-haul flight.
‘But I am taking a different approach when it comes to private jets, increasing the rate of air passenger duty by a further 50 per cent.
‘That is equivalent to £450 per passenger for a private jet to, say, California.
Wine and spirit drinkers: Duty on non-draught products to increase
Alcohol duty rates on non-draught products will increase in line with RPI from February next year.
The latest hikes to duty on wine and spirits follow increases in August last year that were the largest in almost 50 years, adding 20 per cent to excise duty on more than 85 per cent of all wines on the UK market and more than 10 per cent to duty paid on full strength spirits.
Alcohol duty is paid by manufacturers when they make their products.
In general, spirits and wines are taxed more heavily than ciders and beer due to their stronger alcohol content.
The duty is generally passed onto consumers by manufacturers, but product price increases are at their discretion.
Second home owners: Stamp duty rise for second homes
The Chancellor announced, from as soon as tomorrow, those purchasing additional properties will have to pay a 5 per cent stamp duty surcharge.
This is a two percentage point increase from the current level, with Ms Reeves boasting the extra cash earned by the Treasury would benefit other homeowners.
She told the Commons: ‘We are increasing the Stamp Duty Land Tax surcharge for second homes, known as the higher rate for additional dwellings, by two percentage points to five per cent from tomorrow.
‘This will support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years.’
Restrictions will also be announced on the Right To Buy scheme, which allows council house tenants to buy their properties.
Finally, the (few) WINNERS
Low paid workers: Hike to the minimum wage
Benefit for you -£2,500 pay rise for young workers and £1,400 for over-21s
In a move that will boost the income of millions of the lowest paid, the Chancellor used the Budget to unveil a 6.7 per cent increase in the minimum wage.
It will see the baseline payment rate rise to £12.20, a 6 per cent increase – three-times the rate of inflation.
The increase is worth £1,400-a-year for fulltime workers aged 21 and over. But pay for 18 to 20 year olds will go up by £1.40 an hour from £8.60 to £10.00, the highest the largest increase in the rate on record. This will mean an extra £2,500 a year for younger fulltime employees.
While this will boost many workers’ pay packets, it could also deal a blow to firms’ bottom lines and raise fears they could delay or even cancel taking on new staff.
Tina McKenzie, policy chairwoman at the Federation of Small Businesses (FSB), called for extra tax help for owners, saying: ‘Raising employer NICs at the same time as employers adjust to a higher National Living Wage is why the Government should step up and significantly increase the Employment Allowance.
‘Reducing tax employers pay on wages is how you get sustainable rises staff actually feel in their pockets.’
At the same time, the Resolution Foundation think tank pointed out that it amounted to the smallest increase in the minimum wage in three years. Last year it went up 10 per cent.
Nye Cominetti, its principal economist, said: ‘The smaller rise in the minimum wage next Spring – expected to be the first time in almost a decade when it has risen no faster than typical wage growth – is sensible in the context of an expected rise in employer National Insurance contributions at the same time. The Government may want to take a more ambitious approach in future years.’
State pensioners: Triple lock leads to 4.1 per cent uplift
Benefit to you – Extra £9.10 a week
Ms Reeves reiterated the Government’s commitment to the pension triple lock, telling the Commons the basic and new state pension will rise by 4.1 per cent in 2025-26.
The increase will see the weekly benefit rise to £230.30 for the full new flat-rate state pension. However, with income thresholds set to remain frozen, an individual receiving just the state pension will be taxed on their income from 2027.
The Chancellor told the Commons: ‘The pension credit standard minimum guarantee will also rise by 4.1 per cent, from around £11,400 per year to around £11,850 for a single pensioner.’
Draught beer drinkers: Duty cut for pints in the pub
Benefit for you – 1p off the price of a pint (as claimed by the government)
The Chancellor won the biggest cheer of the Budget by announcing draught duty on alcoholic drinks would fall by 1.7 per cent, meaning ‘a penny off a pint in the pub’.
‘Nearly two-thirds of alcoholic drinks sold in pubs are served on draught,’ Ms Reeves told MPs.
‘So today, instead of uprating these products in line with inflation, I am cutting draught duty by 1.7 per cent, which means a penny off a pint in the pub.’
This means that all other tipples such as wine, whisky and gin, will be increase as producers attempt to offset the hike.
But pubgoers buying draught beer and lager at their local will see a slight reduction of a penny.
Drivers: Surprise fuel duty freeze
Benefit for you – No tax-related increase in the cost of a tank
Fuel duty will be frozen for another year in a huge boost for Britain’s more than 30 million drivers.
The Chancellor said the move was a ‘substantial commitment’ because it will cost the Treasury around £3billion.
But she said the decision was the right thing to do for workers who rely on their vehicles to make ends meet amid ‘these difficult circumstances, while the cost of living remains high’.
The move was hailed by motoring groups and means that fuel duty has now been frozen for 15 years in a row, after the previous Tory administration kept it the same for 14 years.
Ms Reeves confirmed that the 5p-a-litre cut to the levy, introduced by former Prime Minister Rishi Sunak in 2022 amid soaring global oil prices, will also remain in place.
The Fuel Duty Escalator, under which fuel duty is supposed to rise in line with inflation, will also remain frozen for another year until April 2026.
It means the levy will remain 52.95p a litre. Had the 5p cut been reversed and the escalator used, it would have added nearly £4 to the cost of a fill-up, or more than £90 a year to the average families’ petrol bills.
The RAC’s head of policy Simon Williams said: ‘It’s good to see the Government firmly recognising the importance of the car to millions of households up and down the country.
‘Eight-in-10 drivers tell us they are dependent on their vehicles for the journeys they need to make, while 70% of commuters who live in rural areas have no other feasible alternatives to get to work beyond taking the car.
‘It’s also worth remembering that even as of today 56% of the total price of a litre of petrol is already tax in the form of fuel duty, and the VAT that is charged on top.’
Carers: Earnings threshold increased
Benefit to you – Able to earn £10,000 more a year (Chancellor claims)
The weekly earnings limit for carer’s allowance will rise to the equivalent of 16 hours a week at the national living wage.
Ms Reeves said: ‘Carer’s allowance currently provides up to £81.90 per week to those with additional caring responsibilities.
‘Today, I can confirm that we are increasing the weekly earnings limit to the equivalent of 16 hours at the national living wage per week, the largest increase since carer’s allowance was introduced in 1976.
‘That means a carer can now earn over £10,000 a year while receiving carer’s allowance, allowing them to increase their hours where they want to and keep more of their money.’
