Details of the Budget were accidentally leaked early by the Office for Budget Responsibility (OBR) with families up and down the country now digesting what it means for them
From taxpayers to pension savers, we reveal the real winners and losers from Rachel Reeves’ Budget.
Details of the Budget were accidentally leaked early by the Office for Budget Responsibility (OBR) with families up and down the country now digesting what it means for them.
The Chancellor has admitted that “ordinary people” will have to “pay a little bit more” after she unveiled £26billion a year of tax rises. But what other measures were announced?
WINNERS
State pensioners
The state pension will rise by 4.8% from next April – well above the current rate of inflation, which is 3.8%.The full new state pension will increase from £230.25 a week to £241.30 a week (£12,547.60 a year) in April 2026.
The state pension rises every year in line with the triple lock. The Chancellor also revealed people who are “only in receipt of the basic or new state pension” will not have to “pay small amounts of tax through Simple Assessment”.
The new full state pension is only just below the £12,570 personal allowance, which means it is very close to approaching the threshold for where it can be taxed.
People on benefits
One of the biggest announcements is the two-child benefit cap is being axed from April 2026. The two-child benefit prevents families for claiming further means-tested benefits, such as Universal Credit, for their third or subsequent child.
Most benefit payments will also rise next April in line with the previous September rate of inflation. However, the Universal Credit standard allowance will go up by an even bigger amount.
The standard allowance will increase from £92 to £98 a week for a single person aged 25 and over, and from £145 to £154 per week for couples.
But in some bad news, the Motability scheme will be reformed to remove luxury vehicles. Motability is a scheme that allows people with a qualifying disability benefit to exchange their allowance for a leased vehicle.
Low-paid workers
The minimum wage is set to increase from April next year. For workers aged 21 and over, the minimum wage will rise by 4.1% to £12.71 an hour.
The minimum wage rate for 18 to 20-year-olds will increase by 8.5% to £10.85 an hour, and the minimum wage for 16 to 17-year-olds and those on apprenticeships will increase by 6% to £8 an hour.
Rail commuters
Rail fares have been frozen until 2027. Train fares in England went up by 4.6% in England earlier this year. The increase applied to regulated rail fares, such as season, anytime day, off-peak and super off-peak tickets.
Unregulated fares – which include advance, anytime, off-peak day and first class fares – are set by train companies.
Drivers of petrol and diesel cars
The 5p per litre cut in fuel duty is being extended until the end of August 2026. This is good news for now – but after this, the cut will be gradually reversed.
Fuel duty is a tax on road fuels, heating oils, and other fuels and it is included in the pump price for petrol and diesel.
LOSERS
Taxpayers
Millions of workers will be hit with tax rises after Rachel Reeves confirmed the tax thresholds are being frozen for another three years.
The personal allowance, which is how much you can earn before you start to pay tax, is set at £12,570. This was meant to be frozen until April 2028 but it will now remain at this level until April 2031.
This means more workers will be dragged into higher tax brackets as their wage increases.
You pay the 20% basic rate of tax on earnings above £12,570, then the 40% higher rate of tax on earnings above £50,270, and the 45% additional rate on earnings above £125,140.
Savers
Big changes to cash ISAs were announced in the Budget. The annual cash ISA limit is being slashed from £20,000 to £12,000 from April 2027 for under-65s.
You will still have an overall £20,000 ISA limit, so you could save £12,000 into a cash ISA and £8,000 into a stocks and shares ISA. Over-65s will still have their full £20,000 cash limit.
The rate of tax paid on savings interest for other accounts is also going to rise by two percentage points across the board from April 2027. If you’re a basic-rate taxpayer, you pay 20% tax on savings interest above £1,000. This will rise to 22%.
Higher-rate taxpayers have a £500 savings interest tax-free allowance, then they pay 40% tax above this amount. This will go up to 42%. Additional rate taxpayers have to pay 45% tax on all their savings interest. This will rise to 47%.
People with expensive homes
Property owners of the most expensive homes worth more than £2million will be hit with a new surcharge from April 2028.
Homeowners of properties valued between £2million and £2.5million will be charged £2,500 a year, while owners of properties above £5million will be charged £7,500.
First-time buyers
There wasn’t really any immediate changes announced for first-time buyers, including no mention of changes to stamp duty. The only thing that was detailed in the Budget documents published after the speech was potential changes to the Lifetime ISA.
The government will consult on reforming the Lifetime ISA and the possibility of replacing it with a new product for first-time buyers.
The Lifetime ISA is a type of savings account where the government gives you a 25% bonus on your savings. You can save up to £4,000 each tax year into a Lifetime ISA – so the maximum bonus you can get each year is £1,000.
But the product has come under fire, as the £450,000 property limit has not been raised since it was launched in 2017 and there is a 25% that savers are slapped with if they have to access their money for any reason other than buying a first-time or their retirement.
This wipes out not only your government bonus, but also part of your original savings.
Smokers and drinkers
Tobacco duty, which is passed down into what you pay in the shop, will rise by RPI inflation plus two percentage points from 6pm today. RPI is set at 3.66%.
Alcohol duty will rise in line with RPI inflation, with the increase set to kick in from February next year.
The Wine and Spirit Trade Association estimates this will add 11p on a bottle of Prosecco, 13p on a bottle of red wine and 38p for a bottle of gin.
Landlords
Landlords will pay more in property income tax rates from April 2027. The basic, higher and additional rates will each increase by two percentage points to 22%, 42% and 47%.
Property experts have warned that these increases are likely to be fed down to tenants in the form of higher rents.
Electric vehicle owners
Drivers of battery electric cars will be hit by a 3p per mile tax from April 2028, while drivers of plug-in hybrids will be charged 1.5p per mile.
The new tax is about “half the fuel duty rate paid by drivers of petrol cars”, according to the Office for Budget Responsibility (OBR).
