London: The United Kingdom’s Budget for 2025, presented today by Chancellor Rachel Reeves, has triggered strong reactions across the country as the government announced major tax increases and significant policy changes affecting households, landlords and investors.
The budget focuses heavily on raising revenue, with the government confirming that it expects to collect around 26 billion pounds through tax adjustments in the coming years. Reeves defended the plan by saying the country must repair public finances and ensure long term stability after years of rising debt.
One of the most talked about measures is the decision to freeze income tax thresholds until 2031. This means as wages rise, more people will move into higher tax brackets, increasing their tax burden even if their financial situation does not improve significantly.
Economists warn this will affect millions of workers.
A new tax on high value properties, often described as a mansion tax, will apply to homes worth more than 2 million pounds from 2028. The government says the tax is aimed at wealthier households, but critics argue it may affect areas with high living costs rather than only the wealthy.
The budget also raises taxes on dividends, rental income and savings income by two percentage points. This is expected to impact landlords and small investors. Landlord groups have expressed concern, saying rental costs may rise as property owners try to cover increased expenses.
Tax relief rules for pensions will also change. Those contributing more than 2000 pounds per year through salary sacrifice will pay more in National Insurance from 2029. Financial advisers say this will mainly affect high income employees.
Not all measures involve tax increases. Reeves announced the end of the controversial two child benefit limit, a policy that previously restricted welfare support for larger families. Charities welcomed the decision and called it a step toward reducing child poverty.
The budget presentation was overshadowed by an unexpected event earlier in the day. The Office for Budget Responsibility accidentally released its economic forecast before the Chancellor delivered her speech. The early release caused brief movements in UK markets and led to public criticism.
The fiscal watchdog later apologised, calling it a technical mistake.
Market reactions following the full announcement were mixed. The pound and government bonds saw brief fluctuations as investors examined the details. Some analysts say the budget creates fiscal space for the government, while others warn it may slow spending and weaken consumer confidence.
The government argues the measures are necessary to rebuild the economy after years of financial strain.
Opposition parties and business groups however say the plan will put more pressure on working families and smaller businesses at a difficult time.
The full impact of the budget will become clearer as new rules begin to take effect in the coming months and years.