Key Highlights of the Upcoming Budget

Chancellor Rachel Reeves is anticipated to announce tax increases in her upcoming Budget statement, aimed at making "fair and necessary choices" to improve the economy by reducing NHS waiting lists, national debt, and living costs. Reeves promises a major growth initiative to create a "fairer, stronger, and more secure Britain." Her statement is scheduled for approximately 12:30 GMT in the House of Commons, where Conservative MP Kemi Badenoch, the opposition leader, will deliver an immediate response.

Recent Announcements

Reeves has disclosed an increase in the minimum wage: for those over 21, it will rise by 50p an hour to £12.71 in April 2026. Workers aged 18 to 20 will see their wage increase to £10.85, up by 85p. The government aims to unify the minimum wage rates for all adults in the future. For 16 and 17-year-olds and apprentices, wages will rise to £8 an hour. Businesses expressed concerns that such increases might lead to hiring freezes or job cuts.

Ahead of the Budget, a milkshake tax has been introduced, extending the current sugar tax to milk-based drinks like milkshakes, flavored milk, milk substitutes, and lattes. This could increase their cost by a few pence unless manufacturers reduce the sugar content.

Potential Tax Increases

The government is evaluating options to boost revenue, with tax hikes and spending reductions on the agenda. Contrary to expectations, Reeves decided against raising income tax rates but might extend the freeze on income tax and National Insurance (NI) thresholds past 2028-29. This freeze could cause some people to incur higher taxes as their salaries increase over time.

The chancellor aims to generate approximately £2 billion by capping a tax relief on pension contributions, as reported by the Times. The proposed £2,000 limit on "salary sacrifice" pension contributions without NI payments could mean additional payments for contributions beyond this cap by both employees and employers.

Additionally, the state pension will likely increase by over £550 annually from April, in line with the "triple lock" system. New taxes on high-value properties in council tax bands F, G, and H, and on electric vehicles (EVs), are being considered to offset reductions in fuel duty.

Furthermore, there are suggestions for landlords, not primarily earning from property, to start paying NI, potentially at a basic rate of 20%, with additional charges above certain earnings thresholds.