Reeves sets Britain on path to highest-ever tax burden with £26bn Budget raid

Around a quarter of Britain’s working population will be paying higher or top rate tax by 2030-32 as a result of Rachel Reeves’s Budget.

Consequently, the tax take is projected to reach 38 per cent of GDP in the same time-frame.

Workers, homeowners mainly in the South East, pension savers, and people who save carefully into Isas will all have the Chancellor’s fingers in their pocket.

More workers will be dragged into higher tax bands, after the Chancellor extended the deep freeze on thresholds by a further three years to 2031.

Saving your pay efficiently into pensions will also be taxed.

The overhaul – enforced from 2029 – will result in any pre-tax contributions above £2,000 incurring National Insurance charges from both the employee and employer. Currently, there is no limit.

A “mansion tax” targeting England’s most expensive homes valued at more than £2m will come into force from 2028. It will mean an additional tax bill for these households of around £5,000.

The amount that people can deposit tax free into a cash Isa each year has been slashed from£20,000 to £12,000.

Over 65s will however retain the full allowance.

Under 65s will be encouraged to put the remaining £8,000 of their allowance into a stocks and shares Isa.

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Electric car drivers will also be targeted, a pay-per-mile pricing scheme will be introduced for electric car drivers from 2028. The 3p tariff – added to car tax bills based on predicted annual mileage – will add around £255 in costs for the average driver covering 8,500 miles.

Ms Reeves also confirmed the two-child benefit cap will be lifted.

Reversals to the government's previously announced cuts to winter fuel payments and health-related benefits will cost £7bn in 2029-30, according to the OBR.

Along with the removal of the two-child benefit cap - costing £3bn by 2029-30 - the OBR estimates this will increase benefits for 560,000 families by an average of £5,310.

Today's Budget announcement was plunged into chaos after the Treasury watchdog accidentally published the details before the Chancellor stood up.

In a shambolic error, the Office for Budget Responsibility (OBR) leaked its assessment of Ms Reeves's fiscal plans 30 minutes before she was due to unveil them in the House of Commons.

The documents, which were revealed just minutes after Ms Reeves brandished her red box outside 11 Downing Street, showed that tax is due to rise by £26 billion, with thresholds frozen for another three years.

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The figures are not meant to be officially published until the Chancellor has formally announced her speech.

The OBR assessment read: "A set of personal tax changes which increase receipts by £14.9 billion in 2029-30, including: freezing personal tax and employer National Insurance contributions (NICs) thresholds for three years from 2028-29, which raises £8.0 billion."

Other points leaked by the OBR included

Freeze in income tax thresholds: Rachel Reeves’ Budget will extend the existing freezes to personal tax thresholds for another three years until 2030-31, the Office for Budget Responsibility’s published forecast document shows.


Two child benefit cap scrapped: The two-child benefit cap is being removed at an estimated cost of £3 billion by 2029-30, according to the Office for Budget Responsibility.


Salary sacrifice pension contributions taxed: National Insurance will be charged on salary-sacrificed pension contributions above an annual £2,000 threshold from April 2029, raising £4.7 billion, the Office for Budget Responsibility said.


Mansion tax: A high-value council tax surcharge on properties worth over £2 million is set to raise £0.4 billion in 2029-30, according to the Office for Budget Responsibility.


Lower growth forecast long term: The Office for Budget Responsibility has increased its forecast for economic growth this year from 1% to 1.5% but downgraded its forecasts for the following four years.


The OBR has since apologised for the blunder and launched an investigation into the "technical error".

The watchdog said in a statement: "A link to our economic and fiscal outlook document went live on our website too early this morning. It has been removed.

“We apologise for this technical error and have initiated an investigation into how this happened.“We will be reporting to our oversight board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again.

"Our economic and fiscal outlook and supporting documents will be released when the Chancellor has finished her speech."

Footage from the Commons appeared to show the moment Ms Reeves was made aware of the leak, when she was handed a phone by minister Torsten Bell.

Before starting her Budget speech, Ms Reeves said the early release of the OBR’s forecasts before she delivered her Budget was “deeply disappointing”.

She told the Commons: “It is my understanding that the Office for Budget Responsibility’s economic and financial outlook was released on their website before this statement.

"This is deeply disappointing and a serious error on their part. The Office for Budget Responsibility have already made a statement, taking full responsibility for their breach.”

Government borrowing costs jumped higher after the early release of the Office for Budget Responsibility forecasts, with long-dated gilt yields under pressure.

Yields on 30-year UK government bonds, which are also known as gilts, jumped as much as seven basis points higher to 5.39%, and rose three basis points for 10-year bonds, at 4.53%.

The yield moves counter to the price of bonds, meaning that prices fall when yields rise.The pound also weakened in response, down 0.2% at 1.31 US dollars and 0.3% lower at 1.13 euros.

Sir Keir Starmer refused to say whether he would order an investigation into budget leaks, when pressed by Tory leader Kemi Badenoch at PMQs.

Ms Badenoch said run-up to the Budget has been the “most chaotic in living memory” and asked the Prime Minister for an explanation of the “complete shambles”.

Sir Keir said the leak was a matter for the OBR, adding: "We all know the biggest shambles in living history, the Liz Truss budget. What did (Mrs Badenoch) say? I don’t agree, this must be wrong? No, she said I think Liz Truss is 100% right.

"Not much room for flexibility, not one thing was wrong with it in her view, so we won’t be taking lectures from her."

Conservative leader Kemi Badenoch compared Sir Keir Starmer’s Government to a “slow motion car crash”.

At Prime Minister’s Questions, Mrs Badenoch said: “This just looks like a Government that is a slow motion car crash. His Cabinet are briefing against each other, his MPs are planning for life after him, and the most chaotic run-up to a Budget in recent memory is happening on his watch.

"Even the chief whip is telling MPs that he wants out. The truth is simple: his MPs don’t trust him, the markets don’t trust him, and the public certainly don’t trust him. When will he finally accept that the chaos starts and ends with him?”

The Prime Minister replied: "The most chaotic budget was the Liz Truss budget. It did huge damage to our country, we’re still suffering from that damage."

He added: “What we’re doing is focusing on cutting waiting lists, cutting the national debt, cutting the cost of living, renewing our country. A Labour Budget with Labour values, delivering for the British people."