Yesterday the Chancellor delivered her Budget Statement to the House of Commons. I'm afraid this Budget does nothing to back those in this country who do the right thing, go to work each day and put money aside at the end of each month. It does nothing to support local businesses either.
The Leader of the Opposition gave an excoriating speech in response to the Chancellor, but here though, I will summarise the main changes that are most likely to impact you and your family.
An extension of the freeze on personal tax thresholds for three years
- Removal of the two child limit on Universal Credit
- Introduction of a new "Mansion Tax" on high value properties of between £2,500 and £7,500 per annum. It will apply for residential properties worth £2 million or more, from April 2028. It will be based on updated valuations and will be in addition to existing Council Tax
- A cap on pension tax relief on salary sacrifice schemes to £2000.
A reduction in the ISA cash limit to £12,000 within the overall annual ISA limit of £20,000
An increase in the basic tax rate on property income and savings income to 22%, the higher rate to 42% and the additional rate to 47%
The introduction of a "pay-by-mile" charge for electric and plug-in hybrid cars from April 2028.
An increase in the ordinary and upper rate of Income Tax on dividends by 2% taking the rates to 10.75% and 35.75% respectively
An increase in Fuel Duty. This will happen in three stages: 1p on 1 September 2026, 2p on 1 December 2026 and 2p on 1 March 2027.
Extension of the sugar tax to milk-based and milk substitute drinks
An increase to the National Living Wage by 4.1% to £12.71 per hour for eligible workers aged 21 and over
Notably for businesses, it was also announced that there will be reform of business rates. From 1 April 2026, business rates bills in England will be updated to reflect changes in property values since the last revaluation in 2023. As a result of the revaluation, the small business multiplier will decrease from 49.9p in 2025-26 to 43.2p in 2026-27, and the standard multiplier will decrease from 55.5p to 48p. However, what was presented as support for business, is anything but, with businesses paying a lower rate - but on significantly higher valuations. Anecdotal reports from small business owners are already suggesting that this will leave them many thousands of Pounds worse off each year. This will hit hard an already struggling hospitality and pub sector.
Finally, I am alarmed that the Office for Budget Responsibility has warned that schools could face a real-terms funding cut of 4.9% per pupil if the Department for Education is required to absorb the cost of covering special needs overspends. Under measures announced in yesterday’s Budget, councils will no longer have to run deficits to pay for children with special educational needs and disabilities (SEND) from 2028–29, with future funding implications to be managed by central government. However, the Government has not yet set out how the estimated £6.3 billion annual cost will be met. The OBR’s analysis cautions that if the burden falls on the existing schools budget, it would reverse the Government’s planned 0.5% real-terms rise in per-pupil funding and instead result in a significant cut to mainstream school budgets.
On all these issues, we will no doubt here more from the Government and the Chancellor in the days and weeks ahead - and I will provide further updates here and in my monthly newsletter.
