Budget 2025: What to expect from Rachel Reeves’ autumn statement
Rachel Reeves is set to unveil her Budget this week, amid intense speculation about potential tax rises designed to stabilize the country’s finances.
The Chancellor is expected to outline measures aimed at reducing future demands on taxpayers, addressing a significant public funding gap and creating a more robust fiscal reserve.
These recommendations are expected to be announced on Wednesday, November 26, around 12.30.
Income tax
Chancellor Rachel Reeves has reportedly abandoned plans for a significant increase in income tax, a move that would defeat commitments in the manifesto.
The U-turn followed less pessimistic forecasts the Treasury received from the budget watchdog, which led to the measure being removed from what Speaker Sir Lindsay Hoyle described as a “hokey budget”.
Instead, Ms Reeves is now said to be in favor of extending the current freeze on income tax thresholds.
If this were implemented alongside a freeze on National Insurance thresholds, an estimated £8.3bn in annual revenue could be generated for the Exchequer by 2029/30.
By not increasing the thresholds, it will take advantage of a process called “fiscal drift”, where people are dragged into paying tax for the first time or shifted to a higher rate as wages rise.
Cash ISAs
Sources familiar with budget preparations, Finance Times He said Reeves would reduce the annual cash ISA limit from £20,000 to £12,000 in a bid to encourage more households to invest their savings in the UK stock market.
railway fares
Rail fares will be frozen in the Budget, saving passengers traveling on more expensive routes more than £300 a year.
This is one of a series of measures aimed at easing the cost of living despite the increasing tax burden that many people and businesses are likely to face.
Prescriptions
The cost of an NHS prescription in England will be frozen at £9.90.
Tax on electric vehicles
The Chancellor is thought to be considering a 3p per mile tax on electric vehicles as he aims to protect revenues as people move away from petrol and diesel and the fuel tax coming to the Exchequer.
EV buyer subsidy
It will also add £1.3bn to the grant, which offers up to £3,750 off the price of an electric vehicle, as part of a package to see £200m of charging points rolled out.
Tax increase on high value homes
A new tax could be imposed on some of the most valuable homes, billed by some as a “mansion tax.”
The move will reportedly revalue some of the most valuable properties in council tax bands F, G and H, reaching 100,000 properties with a new surcharge with a threshold starting at £2 million.
salary sacrifice
The Chancellor could impose limits on how much employees can save in their pensions under salary sacrifices before becoming subject to national insurance.
Reports suggest he could cap this at £2,000 a year; This will reduce the amount people put into their pension funds, resulting in some reduction in take-home pay for those using the scheme to stay in a lower tax band.
Two child allowance limit
As pressure mounts, Ms Reeves is expected to lift the cap restricting child tax credit and universal credit for the first two children in most households.
Estimates vary on how much this will cost; The Resolution Foundation has an estimate of around £3.5bn by the end of this Parliament (2029/30), while the Child Poverty Action Group and the Joseph Rowntree Foundation have lower calculations of around £3bn by then.
A blow to social aid fraud
Ms Reeves will seek to raise £1.2bn by March 2031 by expanding the crackdown on fraudulent and inaccurate universal credit payments through the targeted case review (TCR) scheme.
