What's in the Budget? Key points at a glance

The OBR spending watchdog has apologised and said it has launched an investigation into the apparent leak.

Chancellor Rachel Reeves has said the unprecedented pre-Budget publication of the Office for Budget Responsibility’s document was “deeply disappointing and a serious error on their part”.

But what are the key Budget measures that were released early in error?

Key points:

Freeze in income tax thresholds

Rachel Reeves’ Budget will extend the existing freezes to personal tax thresholds for another three years until 2030-31.

It will remain in place for three years instead of the forecast two years - the OBR estimates that 780,000 more people will be brought into paying income tax in 2029-30.

One in four taxpayers, equivalent to 10.6 million people, will be higher or additional rate taxpayers by 2030. It will raise £12.7 billion for the Treasury and mean that all those in receipt of the full state pension will have to pay income tax for the first time.

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.


The chancellor caved in to back bench demands to axe the two-child benefit cap in a move that will see welfare spending rise by £16bn per year. The policy, introduced under the Conservatives in 2017, means parents can only claim universal credit or tax credits for their first two children.

Removing the cap is expected to cost £3bn a year by 2029-30. The cap does not affect child benefit, which is paid to families where the highest-earning parent earns less than £80,000.

The government estimates the measure will mean 450,000 fewer children are in poverty by 2029-30.

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.

From 2029, there will be a cap of £2,000 per year that can be shielded from employer and employee NI contributions by using a method called salary sacrifice.

Salary sacrifice lets workers and employers agree an amount to be taken out of their pay and shifted into a pension pot before the salary is hit by National Insurance Contributions (NICs) and income tax.

Workers "sacrifice" a higher salary, but receive a tax-free sum into their pensions. Anything ‘sacrificed’ above £2,000 will incur NICS for both staff and companies.

Workers paying income tax at the basic rate will pay NICS at a rate of 8%, while higher rate taxpayers will pay 2%. Employers pay NICs at a rate of 15%.

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.


The "high value council tax surcharge" will apply in England from 2028 and will raise £400m a year for the government, the chancellor said.

Ms Reeves was expected to introduce a re-evaluation of homes in the three highest council tax tiers (F, G and H), with a surcharge on them.

She did not announce this, but instead said there will be four bands for the new mansion tax, with values based on 2026 house prices.

The lowest band, for properties worth between £2m and £2.5m, will pay £2,500 a year on top of their council tax.

The highest band, for homes worth £5m or more, will pay £7,500.

Cash Isas

The amount of money that can be saved tax-free each year in cash Isas has been cut to £12,000 from April 2027, from £20,000. Those aged over 65 will retain the full cash allowance.

People can put the extra £8,000 into a stocks and shares Isa, which Ms Reeves hopes will encourage investment.

However many risk-averse savers are likely to push their cash into savings accounts instead, adding hundreds of pounds a year to their tax bills.

It will leave savers up to £2,300 worse off by the end of the decade, analysis shows.

A basic rate taxpayer who previously used their full cash Isa allowance every year and reacted to the new limit by stashing £8,000 into a savings account instead would lose £328 over five years. For a couple with identical savings, this would mean a combined tax bill of £656.

Electric vehicles

Electric vehicle drivers will be charged 3p per mile on top of other road taxes from 2028. The average driver of a battery electric car in 2028–29 driving 8,500 miles is therefore expected to be charged £255 in this year.

From April 2028, electric car drivers will pay the 3p per mile charge, while plug-in hybrid drivers will pay 1.5p per mile, with the rates going up each year with inflation.

Motorists will have their mileage checked annually, typically during their MOT as is already the case, or for new cars, around their first and second registration anniversary, the Treasury said.

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 Office for Budget Responsibility increased its growth expectations for this year, but downgraded its forecast for the following four.

The increased tax burden on hard-working Brits will mean growth will only “pick up gradually” in the short term, according to the OBR, with consumers not willing to spend as much “in anticipation of further tax rises.”

The OBR highlighted that the tax burden on the economy would hit record levels by the end of the parliament.