Reeves’ Budget Sparks Debate as Millions Face Higher Taxes
So, the big story right now is Rachel Reeves’ latest Budget, and it’s already being talked about as one of the most consequential in years. It’s a package that pulls together around £26bn in tax rises, and Reeves has been very open about what that means: she says she’s asking ordinary people to “pay a little bit more.” And while that phrase is doing a lot of heavy lifting, the idea behind it is that the burden is meant to fall more heavily on those with, as she puts it, “the broadest shoulders.”
A major part of this Budget is the extension of the freeze on tax thresholds. That freeze will now run until 2031, which effectively means millions of people will end up paying more tax simply because their earnings move up while thresholds stay put. By 2031, almost one in four people will be paying at least some tax at the higher rate. Reeves didn’t sugarcoat that—she acknowledged it would affect working households, but insisted this approach lets her avoid even bigger hikes elsewhere.
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Alongside that, she’s introducing a new annual property charge for homes valued over £2m—what many are already calling a “mansion tax.” Electric vehicle drivers are being brought into the tax net too, with a per-mile charge coming in from 2028. Betting duties are going up, online gambling especially. Even pension contributions through salary-sacrifice schemes are being capped, something that wasn’t expected and, according to the OBR, will raise billions.
But the Budget isn’t only about raising money. Reeves has also scrapped the two-child benefit cap—a major move that Labour MPs loudly welcomed. It’s a measure she says will lift nearly half a million children out of poverty. She’s also dropping green levies on electricity bills, promising an average £150 saving, and freezing some rail fares and prescription charges to help with day-to-day costs.
Now, the politics around all this have been intense. The Conservatives immediately accused Reeves of breaking her promises, saying she vowed not to return asking for more tax revenue. Kemi Badenoch even called the whole thing a “total humiliation” and said Reeves should resign. The Liberal Democrats and Reform UK came out swinging too, arguing the Budget raises taxes without truly addressing the cost-of-living crisis. The Greens said it doesn’t go far enough in taxing extreme wealth, while the SNP called it chaotic and insufficient for Scotland.
And just to add a twist, the OBR accidentally leaked parts of its assessment before Reeves even began speaking. She called the leak “deeply disappointing,” and the OBR has launched an investigation into what it says was a technical error.
Despite the uproar, Reeves insists this is the “right thing to do”—a Budget designed to avoid reckless borrowing, protect public services, and stabilise the economy. Whether people agree with that will probably come down to how much their own household budget shifts over the next few years.
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