A ‘technical error’ from the Office for Budget Responsibility (OBR) gave us an early heads up that the ‘black hole’ in the government’s finances maybe isn’t as quite as bad as Rachel Reeves has previously painted, with growth forecasts over the next 12 months upgraded from 1% to 1.5%.

However, this did not stop the Chancellor announcing tax rises of £26 billion by 2029-30 as she strives to cut NHS waiting lists, cut the cost of living, and cut the deficit and borrowing costs.

So, what is included on Rachel’s ‘Smorgasbord’ of tax increases?

• 2% hike in tax on Dividend Income (from April 2026) and Rental and Savings Income (from April 2027) for Basic & Higher taxpayers.
• 2% tax increase applies to Rental and Savings Income only for Additional Rate Taxpayers from April 2027.
• The freeze on the Personal Allowance and Income Tax Thresholds for a further 3 years to April 2031
• National Insurance savings on Salary Sacrifice Pension Contributions limited to a £2,000 annual cap from April 2029.
• Introduction of a high value council tax surcharge of £2,500 on properties worth >£2M and £7,500 on properties >£10M from April 2028.
• Cash ISA contributions annual allowance limited to £12,000 for the under 65’s from April 2027.
• A new Electric Vehicle Duty from 2028-29 of 3p on the mile or 1.5p for Plug-In Hybrids.

With these increases designed for ‘everyone to make a contribution’ but the ‘wealthiest to contribute the most’ what benefits can we expect to see as evidence of the Chancellor’s decisions working in the future?

Inflation is forecast to fall by 0.40% in the next 12 months aided by the extension of the Bus Fare Cap, freezing of prescription charges and rail fares, and the 5p fuel duty increase suspended to September 2026.

The Chancellor also promised a reduction in energy costs, alluding to the reduction in additional levies that should reduce the annual domestic bill by £150 per year.

But will the increase in the Minimum Wage to £10.85 for 18–21-year-olds and £12.71 for older workers prove inflationary, especially in lower paid sectors like hospitality and care, and subsequent calls for higher wages across all pay grades?

You may see a new Neighbourhood Health Services pop up near you, cuts in NHS waiting times, or a new library pop-up in your local primary school.

State pensioners can breathe a sigh of relief with the ‘triple lock’ unchanged, a 4.8% increase from April 2026, and an assurance you won’t be left with small income tax liabilities due to the continued freeze on the Personal Allowance leaving your State Pension subject to income tax.

The Chancellor made little noise about the revision to the last budget which will allow unused Agricultural & Business Property reliefs to be transferred between spouses, which may go some way to simplifying future Inheritance Tax planning for those with qualifying assets.

But the Chancellor’s proudest moment was the announcement of the scrapping of the 2-child benefit cap which may raise 450,000 children out of poverty.

This may have appeased her backbenchers, but announcements of welfare reform to return 15,000 people back to work, remove luxury cars from the Motability Scheme, and tax the excess profits on asylum hotels may have been included to answer her political rivals.

It is clear to see that the raft of tax increases announced will bring more pressure on the sustainability of your future financial planning.

With tax increases putting more pressure on your savings and investments to fulfil your future needs, once again it is important to talk with your financial adviser to ensure you are making full use of the tax allowances that remain available and that your financial plans remain on track.

Contact us on 0330 320 9280, email: info@cravenstreetwealth.com or complete our online enquiry form to discuss how government policy could impact your financial plans.

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References to legislation and tax is based on our understanding of United Kingdom law and HM Revenue & Customs practice at the date of publication. These may be subject to change in the future. Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of these comments.

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