Budget: Taxes raised to all-time high by Reeves

RACHEL Reeves has announced tax rises amounting to £26 billion as she battles a downgrade in forecast economic growth.

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More than 1.7 million people will face paying more income tax as she froze thresholds, meaning people will be dragged into paying the tax for the first time or shifted into higher bands as earnings increase. The measures contribute to a tax burden that will rise to an “all-time high” in 2030/31.

The Office for Budget Responsibility (OBR) forecast gross domestic product would grow by 1.5% this year, an increase from its earlier 1% forecast. But it downgraded growth in 2026 from 1.9% to 1.4%, in 2027 from 1.8% to 1.5%, in 2028 from 1.7% to 1.5% and in 2029 from 1.8% to 1.5%.

The freeze in thresholds will result in 780,000 more basic-rate, 920,000 more higher-rate and 4,000 more additional-rate income tax payers in 2029/30.

Scotland has a separate income tax system.

The policy, which applies to income tax and national insurance contributions, will bring in £8.3 billion for the Exchequer in 2029/30 and the freeze will extend to 2030/31.

Other personal tax changes include £4.7 billion through charging national insurance on salary-sacrificed pension contributions, and £2.1 billion through increasing tax rates on dividends, property and savings income by two percentage points.