UK's 2025 Budget: Tax Hikes and Freezes Explained
The UK's finance minister, Rachel Reeves, has revealed a budget plan featuring several tax adjustments designed to increase government revenue. The Office for Budget Responsibility (OBR) initially disclosed some details but later referred to it as a "technical error".
Key Tax Changes
- Income Tax Thresholds Frozen Until 2030/31
Taxpayers will see higher tax payments as their incomes rise.
- New Tax on Expensive Homes
- Targets properties valued over £2 million.
Set to begin in April 2028, adding to existing local taxes.
- Fuel Duty Rates Remain Frozen
- Continues a policy in place since 2011.
Likely to prevent driver protests.
- New Charges for Electric and Hybrid Cars
- Starting in April 2028.
Aims to compensate for lost fuel duty revenue as electric vehicle adoption grows.
- Dividend Tax Rates Increase
- Rates will rise by 2 percentage points.
Affects individuals earning income from investments.
- Gambling Duties to Rise
- Another measure to boost government revenue.
Economic Impact
The proposed changes combine new taxes and continued freezes, aiming to raise more funds but also increasing costs for many. It is essential to consider how these adjustments will impact different groups and the broader economy.
