Rachel Reeves’ second Budget morphed into a chaotic event when the Office for Budget Responsibility (OBR) embarrassingly leaked the detailed Budget costings and measures online an hour before the Chancellor stood up to deliver her speech. This leak, together with the constant stream of prior announcements as to the content of this Budget – which started almost immediately after her first Budget last October – resulted in a severe reprimand from the Speaker of the House of Commons and a point of order from the Shadow Chancellor Mel Stride. In the event Rachel Reeves was unremorseful about the level of pre-Budget consternation created by speculation as to the content of today’s Budget.
As a result of the new direction pursued by this government of making tax policy by popular opinion and media coverage, many of the Chancellor’s measures contained no surprises. However, several new proposals are likely to be unpopular, including increasing income tax rates on savings and property income by 2%, effective from 6 April 2027, and dividend income for basic and higher rate taxpayers from April 2026. Keep reading for detailed commentary on these new tax changes.
There is to be a form of “mansion tax” for residential properties over £2m and other wealth related measures. The most short-sighted measure announced will be the £2,000 cap on salary sacrificed defined contribution pension scheme contributions qualifying for NIC relief – these are the types of schemes operated by private sector employers and which form a key incentive to workers to save for their retirement. This measure will hit both employees and employers from April 2029 and will act as a disincentive for private sector workers to save for retirement but will raise £4.7bn a year in more NICs being paid to the government.
The M+A Partners team has summarised the measures that our clients will want to know about. If you would like more information about how this Budget will affect you, your family or your business please do not hesitate to contact your usual team member at M+A Partners.
