Every Budget bombshell you have to know – main profit change and tax rise

Chancellor Rachel Reeves unveiled £26billion a year of tax rises, but also confirmed the controversial two-child benefit limit will finally be scrapped in a victory for anti-poverty campaigners

Rachel Reeves has unveiled £26billion a year of tax rises in a Budget that was leaked moments before it was published.

The Chancellor announced a new mansion tax affecting homes worth over £2million and finally confirmed that the two-child benefit limit will be torn up after years of calls by anti-poverty campaigners.

Controversially she confirmed income tax thresholds will be frozen – a move that will affect more than 1.5million workers. The gambling industry will be hit with new levies, but fuel duty will remain frozen until next year, Ms Reeves said.

Ms Reeves told a rowdy House of Commons: “These are my choices. The right choices for a fairer, a stronger and more secure Britain.”

Here The Mirror looks at the key details from the Chancellor’s long-awaited Budget.

For live updates on the Budget, click here

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New ‘mansion tax’ on expensive homes

The Chancellor has announced a new tax on homes worth above £2million.

This is expected to affect between 100,000 and 200,000 homes. The charge will be between £2,500 and £7,500 a year, and is expected to raise around £400million for the Treasury every 12 months.

The Budget includes a “high value council tax surcharge” on properties worth over £2 million.

In its response, the OBR said: “From April 2028, owners of properties identified as being valued at over £2 million by the Valuation Office (in 2026 prices) will be liable for a recurring annual charge which will be additional to existing council tax liability. There will be four price bands with the surcharge rising from £2,500 for a property valued in the lowest £2million to £2.5million band, to £7,500 for a property valued in the highest band of £5million or more.”

Two child benefit limit scrapped – at last

In a major move the Chancellor axed the cruel two-child benefit limit, which has been blamed for trapping kids in poverty.

Introduced by the Conservatives in 2017 it restricts child tax credits and universal credit to the first two children in a family.OBR documents show it will cost the Treasury an estimated £3billion by 2029-30 – but the government estimates it will reduce child poverty by 450,000.

Labour MPs and former Prime Minister Gordon Brown have long been lobbying Keir Starmer and his top team to axe the policy, which has previously caused huge tensions in the party. The Chancellor also announced today benefits will be uprated in line with inflation in April. The Chancellor also announced today benefits will be uprated in line with inflation in April

Gambling industry hit with new duties

The Chancellor unveiled plans to raise £1.1billion in reforms to gambling taxes. From April 2026 there will be an increase in remote gaming duty from 21% to 40%.

And from April 2027 there will be a new rate of general betting duty for remote betting – set at 25%. But self-service terminals, spread betting, pool bets and horseracing will be excluded.

The measures are expected to raise £1.1billion by 2029-30, Ms Reeves expects. There were cheers as she said she would scrap Bingo Duty.

First rail fare freeze in 30 years

The Chancellor announced the first rail fare freeze in 30 years.

This is set to save existing rail passengers £600million in 2026/27, across more than a billion train journeys. At the weekend Transport Secretary Heidi Alexander told The Mirror: “Fares have gone up pretty much every year in the last 30 years, and I think that’s something that’s really angered the public.

“If you look at the way in which Conservative ministers ran the railways, they allowed the private sector to cream off profits whilst delivering an unreliable service.”

Controversial income tax freeze

Income tax thresholds will be frozen for an additional two years, until 2030.

The controversial measure means more people will move into higher tax brackets as their wages go up.

The Office for Budget Responsibility (OBR) said: “Overall, the changes to income tax covering the freezes at the basic, higher and additional rates are forecast to yield a total of £56billion in 2030-31, of which £12billion is from the freezes announced at this Budget.”

The OBR estimates 780,000 more people will pay the basic rate, while 920,000 will pay the higher rate and 4,000 hit by the additional rate.

Mileage levy for electric cars

The Budget has confirmed there will be a new mileage-based charge on electric and plug-in hybrid cars from April 2028.

This will be around half the fuel duty rate paid by drivers of petrol cars, and is expected to raise £1.4billion for the Treasury.

Bills to go down by £150, Chancellor claims

The average household will see a £150 cut to their energy bill from April, Ms Reeves said. She told the Commons: “The Conservatives’ ECO (energy company obligation) scheme was presented as a plan to tackle fuel poverty.

“It costs households £1.7 billion a year on their bills and for 97% of families in fuel poverty, the scheme has cost them more than it has saved. It is a failed scheme.

“So, I am scrapping that scheme along with taking other legacy costs off bills. And as a result, I can tell you today that, for every family we are keeping our promise to get energy bills down and cut the cost of living with £150 cut from the average household energy bill from April.

“Money off bills, and in the pockets of working people. That is my choice. Not to neglect Britain’s energy security, like the Tories did. Not to leave working families to bear the brunt of high prices, like the Tories did. But to get energy costs down now and in the years to come. That is the Labour choice.”

Boost for pensioners

Millions of pensioners will receive a boost of around £550-per-year as the state pension increases from April next year.

Ms Reeves confirmed at the Budget it will go up in line with average earnings growth – which stood at 4.8% in September. Under the triple lock guarantee, the state pension increases every April in line with whichever is the highest of earnings growth in between May to July, inflation in September, or 2.5%.

The current state pension rate stands at £230.25-per-week. Expect this to rise to just over £240-per-week from April.

Fuel duty frozen

Rachel Reeves will retain the 5p cut in fuel duty until September 2026, when it will be reversed through a staggered approach, according to the Office for Budget Responsibility.

The measure is expected to cost around £2.4billion next year, and £0.9billion in the medium term, according to the OBR.

Minimum wage hike

The Chancellor confirmed pay hikes for around 2.7 million workers from next April ahead of her highly anticipated Budget.

From April, the National Living Wage will rise to £12.71 per hour for workers over 21-years-old, an estimated annual hike of £900 for around 2.4 million of the lowest paid. The National Minimum Wage for 18 to 20-year-olds will also increase by 8.5% to £10.85 per hour.

National Insurance on salary-sacrificed pension contributions

The Chancellor confirmed that the Government will be charging national insurance contributions (NICs) on salary-sacrificed pensions contributions. This will raise £4.7billion a year.

Contributions above a £2,000 threshold will no longer be exempt from April 2029. This means that salary-sacrificed contributions will be treated as ordinary employee pension contributions.

But the OBR warned that some employers could look to find ways of working around this measure – meaning the yields are more uncertain.

‘Milkshake tax’

The tax on sugary drinks will be widened to drive down obesity and protect children’s health.

The threshold for the Soft Drinks Industry Levy from 5g to 4.5g of sugar per 100ml, meaning more beverages will be affected unless manufacturers slash sugar levels. Milkshakes and pre-packaged coffees will also be included for the first time as an exemption on milk-based drinks is expected to be ditched.

The changes are set to kick in from January 2028 – putting manufacturers on notice to reduce the sugar content in their drinks or face the new charge.

ISA limit cut

Rachel Reeves has finally confirmed that the cash ISA limit is being cut – but only for younger savers.

The Chancellor used her Autumn Budget to confirm the annual cash ISA limit is being slashed to £12,000 from April 2027. There will still be an overall £20,000 ISA limit, so it means you could save £12,000 into a cash ISA and £8,000 into a stocks and shares ISA.

But over-65s won’t be affected by the new cap, and will still be able to save up to £20,000 every tax year into a cash ISA. You can currently save up to £20,000 every tax year across any ISA accounts you may have.

An ISA is a type of savings account where any interest you earn is always tax-free. As well as the cash ISA rate being cut, it has been confirmed that the rate of tax paid on savings interest for other accounts is going to rise from April 2027.

Tourist tax

A new tax on overnight stays in hotels and other holiday accommodation, including Airbnbs, has been announced. This is expected to raise the cost by £2 a night – but will be at the discretion of local leaders.

Money will go to regional Mayors or local authorities to spend in their area.

Boost for NHS technology

Ms Reeves pledged to “renew” the NHS as she confirmed £300 million would be invested in the health service’s technology.

She told the Commons: “Today I’m announcing a £300 million investment in technology to improve patient service and 250 new neighbourhood health centres, expanding more services into communities so that people can receive treatment outside of hospitals and get better, faster care where they live with over 100 to be delivered by 2030 including in Birmingham, Truro and Southall.

“The Labour Party founded our NHS and we are renewing our NHS.”

Lower Thames Crossing

The Chancellor confirmed there will be funding for the long-awaited Lower Thames Crossing, which will connect Essex and Kent through a tunnel. Ms Reeves told the Commons: “Today, I will commit investment for the Lower Thames Crossing, and we’re continuing to drive investment in city region transport in the Midlands rail hub and the TransPennine route upgrades, along with our commitments to the Northern Growth Corridor, including Northern Powerhouse Rail.”