Chancellor Rachel Reeves has unveiled a highly anticipated UK budget that's set to raise £26.1 billion by 2030 through sweeping tax hikes, sparking both praise and criticism from economists and politicians alike.
One of the most significant takeaways from this budget is that Labour broke its promise not to raise taxes for working people. The government plans to freeze existing income tax thresholds, which means more individuals will pay higher tax as their incomes rise with inflation. This move is expected to affect around 2 million people, including 780,000 who'll be pulled into the basic-rate tax bracket and 920,000 who'll face higher rates.
Wealthier individuals will also feel the pinch under this budget, with a "mansion tax" on properties worth over £2 million set to generate an additional £1.8 billion by 2030. The government is also reducing the amount of tax relief some high earners can claim on pension contributions and increasing tax rates on rental income, dividends, and capital gains.
Labour's commitment to welfare spending has also been reinforced, with plans to scrap the two-child benefit cap from April 2026, a move expected to lift thousands of children out of poverty. The government is promising to spend an additional £1.4 billion by 2030 on welfare programmes, including child poverty initiatives.
The UK's much-maligned "rape clause" will also be scrapped under this budget, with the government pledging to remove the exemption requirement that currently allows women who have conceived children non-consensually to avoid the two-child benefit cap.
However, the economic outlook has been downgraded by the Office for Budget Responsibility (OBR), which now forecasts 1.4% GDP growth in 2026 and lower growth rates for the following four years. Productivity growth is also expected to be slower than initially predicted.
Despite these challenges, the pound and financial markets have responded positively to this budget, with sterling rising by 0.3% against the dollar just before the announcement. London's blue-chip FTSE index rose by 0.6%, with many analysts hailing this as a success for Chancellor Reeves and her team.
One of the most significant takeaways from this budget is that Labour broke its promise not to raise taxes for working people. The government plans to freeze existing income tax thresholds, which means more individuals will pay higher tax as their incomes rise with inflation. This move is expected to affect around 2 million people, including 780,000 who'll be pulled into the basic-rate tax bracket and 920,000 who'll face higher rates.
Wealthier individuals will also feel the pinch under this budget, with a "mansion tax" on properties worth over £2 million set to generate an additional £1.8 billion by 2030. The government is also reducing the amount of tax relief some high earners can claim on pension contributions and increasing tax rates on rental income, dividends, and capital gains.
Labour's commitment to welfare spending has also been reinforced, with plans to scrap the two-child benefit cap from April 2026, a move expected to lift thousands of children out of poverty. The government is promising to spend an additional £1.4 billion by 2030 on welfare programmes, including child poverty initiatives.
The UK's much-maligned "rape clause" will also be scrapped under this budget, with the government pledging to remove the exemption requirement that currently allows women who have conceived children non-consensually to avoid the two-child benefit cap.
However, the economic outlook has been downgraded by the Office for Budget Responsibility (OBR), which now forecasts 1.4% GDP growth in 2026 and lower growth rates for the following four years. Productivity growth is also expected to be slower than initially predicted.
Despite these challenges, the pound and financial markets have responded positively to this budget, with sterling rising by 0.3% against the dollar just before the announcement. London's blue-chip FTSE index rose by 0.6%, with many analysts hailing this as a success for Chancellor Reeves and her team.
. On one hand, it's all about fairness and making sure everyone contributes their fair share to the system. Scraping that nasty 'rape clause' is a big win 
. But on the other hand, tax hikes are always a no-go for many people, especially those who are already struggling 
. And 2 million people getting hit with higher taxes? That's not exactly what I'd call good news 
.
. More funding for welfare programmes is long overdue in my opinion 
. But the economic outlook isn't looking too great... slow productivity growth and all that 
. Still, I suppose it's better than what we had before 
. Only time will tell if this budget really makes a difference 
.
meanwhile, the wealthy are getting hit too with this "mansion tax" thing 
and i'm low-key glad they're scrapping that rape clause tho 
1.4% growth in 2026 is like what? barely scraping by 
anyway, the pound is up so i guess that's a win for chancellor reeves 
... I don't know if it's all going to translate to actual improvements in people's lives. Tax hikes are always a bit of a bummer 
... slower growth rates can be kinda of a buzzkill 
I think the UK government should've been more careful with this budget, mate. They're gonna hit people in the pocket, especially those on lower incomes, but at the same time, it's not like they're gonna solve all their problems 
. The whole thing just feels a bit...inconsistent 
. I mean, Labour made some good promises about welfare spending and stuff, but then you got these massive tax hikes that'll affect loads of people 
. Still, it's all a bit of a mixed bag, innit?
. I guess you could say the government's got some "fiscal" responsibility to its citizens 
. Anyway, if anyone needs me, I'll be over here trying to figure out how much more of my paycheck will go towards taxes... and probably complaining about it on social media 
and lifting thousands of kids out of poverty is amazing 
but 1.4% GDP growth in 2026? that doesn't sound so great 
! Scraping the two-child benefit cap is literally gonna make such a huge difference in people's lives, especially single parents struggling to make ends meet 
!
. I mean, Labour said they wouldn't do it but here we are... 
. It's just gonna affect so many people in the long run. And £2 million mansion tax? That's just crazy 
? I'm all for lifting those welfare spending figures though 
. And they're also gonna lift all those kids out of poverty, that's a beautiful thing 
.
. But hey, I guess the markets seem to be happy with it? 
. Oh, and can we just forget about the "rape clause" being scrapped already? Like, what a great way to spin a major policy change as a positive 
. Guess that's why they call it a budget, not a miracle worker's dream package 
.
. On the other hand, I do think it's great that Labour is trying to reduce child poverty 
and i'm kinda confused about how this affects people who are single parents or have more than 2 kids... can someone explain that to me?