Millions are being clobbered with £40billion in tax rises during Rachel Reeves‘ bruising first Budget today.
While the Chancellor vowed to exclude ‘working people’ from tax hikes, this political sophistry is fooling no one – with nearly all Brits set to be worse off in one form or another.
From pension holders to investors, smokers to jobseekers, the list of losers from today’s Budget is long.
But there are a small number of winners, including low earners who could see a £1,400 pay rise thanks to a hike in the minimum wage.
Below, MailOnline reveals how much more you will pay –
While the Chancellor vowed to exclude ‘working people’ from tax hikes, this political sophistry is fooling no one – with nearly all Brits losing out in one form or another
LOSERS –
Parents with children at private schools: VAT exemption axed
Cost for you – £3,300 to parents paying the annual average of £16,656
Starting in the new year fee-paying schools will no longer be exempt from the tax, and from April will get no business rate relief, as the government looks to fund 6,500 extra teachers for state schools.
Critics of the plan have argued that the change is coming in too fast and could force some schools to close as parents pull their children out due to higher fees.
There are also fears of the impact on special needs schools, military children, and the effect of extra pupils entering the state system in the middle of the academic year.
Currently, independent schools do not have to charge 20 per cent VAT on their fees because there is an exemption for the supply of education.
The French and German ambassadors to the UK have also called for international to be excluded
Starting in the new year, fee-paying schools will no longer be exempt from the tax, and will get no business rate relief, as the government looks to fund 6,500 extra teachers for state schools
Jobseekers: National Insurance increase for employers
Cost for you – Companies will pay, but it could hit workers down the line
Employers’ national insurance contributions will rise by 1.2 percentage points to 15 per cent in April 2025, and the threshold for paying them will fall from £9,100 per year to £5,000, the Chancellor has announced.
The NI increase for employers has been dubbed a ‘tax on jobs’ and could have a detrimental impact on business confidence, at the same time the Government is trying to make the UK an attractive place to invest.
It will add further labour costs to businesses already struggling with an imminent rise in the national living wage, as well as other cost constraints.
Any changes made to employer contributions will almost certainly trickle down to employees. Employers might also look to alternatives to cut costs by either investing in technology to reduce labour, or offshoring some of the work to other countries.
Changes made to employer pension contributions could also have an impact on how non-pension benefits, like healthcare, could be treated.
Vapers and smokers: New duty introduced for vape fluid
Cost for you – £1.40 more for a bottle of vape liquid
Labour ramped up its war on vapers today after Ms Reeves announced a new flat rate duty on all e-cigarette liquid in her Budget speech.
The Government will roll out a new flat rate duty on all vaping liquid from October 2026.
And the Chancellor revealed a 10 per cent hike on hand-rolling tobacco would be implemented this year.
The new vaping levy follows a previous pledge by the Conservative government to do so, with the latest increases coming into effect from April 2026. ahead of a planned ban of single-use disposable e-cigarettes next June.
It will introduce a toll of £1-3 per 10ml vape liquid, increasing depending on nicotine levels. Experts warned it would see the average UK vaper spending almost £73 a year on the habit, with the cost of a £4 e-liquid bottle swelling to £5.40.
Air passengers: Duty rises (and it’s even worse if you have a private jet!)
Cost for you – £2 on the cost of an economy ticket for a short-haul flight
Air passenger duty (APD) will rise, adding up to £2 to the cost of an economy ticket for a short-haul flight, while private jet users will suffer a 50 per cent hike.
APD rates are based on the length of the flight and the class of cabin.
For passengers travelling in economy, they are £7 for a domestic flight, £13 for a short-haul flight, and £88-£92 for a long-haul flight.
Those in premium cabins are charged £14 for a domestic flight, £26 for a short-haul flight, and £194-£202 for a long-haul flight.
Private jet passengers currently face an APD rate of £78 for domestic or short-haul flights, and £581-£607 for long-haul flights.
Ms Reeves mocked Tory leader Rishi Sunak as she joked his ‘ears have pricked up’ when she mentioned APD.
The Chancellor told the Commons: ‘Air passenger duty has not kept up with inflation in recent years so we are introducing an adjustment, meaning an increase of no more than £2 for an economy class short-haul flight.
‘But I am taking a different approach when it comes to private jets, increasing the rate of air passenger duty by a further 50%.
‘That is equivalent to £450 per passenger for a private jet to, say, California.’
Farmers: Inheritance tax for those passing on estates
Farmers passing on estates worth more than £1m will now be subject to a 20 per cent inheritance rate, despite previously being exempt.
Finally, the (few) WINNERS
Low paid workers: Hike to the minimum wage
Benefit for you – £1,400 pay rise
In a move that will boost the income of millions of the lowest paid, the Chancellor used the Budget to unveil a 6.7 per cent increase in the minimum wage.
It will see the baseline payment rate rise to £12.20, a 6 per cent increase – three-times the rate of inflation.
The increase is worth £1,400-a-year for fulltime workers aged 21 and over. But pay for 18 to 20 year olds will go up by £1.40 an hour from £8.60 to £10.00, the highest the largest increase in the rate on record. This will mean an extra £2,500 a year for younger fulltime employees.
While this will boost many workers’ pay packets, it could also deal a blow to firms’ bottom lines and raise fears they could delay or even cancel taking on new staff.
Tina McKenzie, policy chairwoman at the Federation of Small Businesses (FSB), called for extra tax help for owners, saying: ‘Raising employer NICs at the same time as employers adjust to a higher National Living Wage is why the Government should step up and significantly increase the Employment Allowance.
‘Reducing tax employers pay on wages is how you get sustainable rises staff actually feel in their pockets.’
At the same time, the Resolution Foundation think tank pointed out that it amounted to the smallest increase in the minimum wage in three years. Last year it went up 10 per cent.
Nye Cominetti, its principal economist, said: ‘The smaller rise in the minimum wage next Spring – expected to be the first time in almost a decade when it has risen no faster than typical wage growth – is sensible in the context of an expected rise in employer National Insurance contributions at the same time. The Government may want to take a more ambitious approach in future years.’
Draught beer drinkers: Duty cut for pints in the pub
Benefit for you – 1p off the price of a pint (as claimed by the government)
The Chancellor won the biggest cheer of the Budget by announcing draught duty on alcoholic drinks would fall by 1.7 per cent, meaning ‘a penny off a pint in the pub’.
‘Nearly two-thirds of alcoholic drinks sold in pubs are served on draught,’ Ms Reeves told MPs.
‘So today, instead of uprating these products in line with inflation, I am cutting draught duty by 1.7 per cent, which means a penny off a pint in the pub.’
This means that all other tipples such as wine, whisky and gin, will be increase as producers attempt to offset the hike.
But pubgoers buying draught beer and lager at their local will see a slight reduction of a penny.
Drivers: Surprise fuel duty freeze
Benefit for you – No tax-related increase in the cost of a tank
Fuel duty will be frozen next year in a fillip for drivers.
Ms Reeves said this was a ‘substantial commitment’ but insisted raising taxes on fuel would be ‘the wrong choice for working people’.
This means the 5p per litre cut in fuel duty introduced by the Conservative government in March 2022 will continue.
Until the 5p cut, fuel duty had been frozen at 57.95p per litre since March 2011.
VAT is charged at 20% on top of the total price of fuel.
Ms Reeves said: ‘To retain the 5p cut and to freeze fuel duty again would cost over £3 billion next year.
‘At a time when the fiscal position is so difficult, I have to be frank with the House that this is a substantial commitment to make.
‘I have concluded that in these difficult circumstances – while the cost of living remains high and with a backdrop of global uncertainty – increasing fuel duty next year would be the wrong choice for working people.
‘It would mean fuel duty rising by 7p per litre. So, I have today decided to freeze fuel duty next year and I will maintain the existing 5p cut for another year, too.
‘There will be no higher taxes at the petrol pumps next year.’
Government figures show the average cost of a litre of petrol and diesel at UK forecourts is around £1.34 and £1.40 respectively.
Carers: Earnings threshold increased
Ms Reeves has hiked the Carers Allowance, which enables carers to earn more and still receive the government allowance.
Bus passengers: Freeze on fares continues
A freeze in bus fares will continue, in another surprise Budget announcement.
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