Chancellor Rachel Reeves has delivered her much-anticipated Budget
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The main points of Rachel Reeves’ 2025 Budget
- Families – the two-child benefit cap will be scrapped from April. The cap meant low-income families could not claim extra means-tested benefits for a third or subsequent child born after April 6, 2017. The measure, which affects Universal Credit and Tax Credits, was introduced by the Conservative government but had faced criticism for pushing children into poverty.
- Income tax – Thresholds will be frozen for a further three years beyond 2028, meaning as salaries rise with inflation, more people will be pushed into higher brackets. National Insurance and tax rates will remain the same.
- Utility bills – £150 will be cut from the average household bill from April next year, partly through legacy costs being removed from bills.
- Tobacco and alcohol – Duties on both have been raised – alcohol inline with inflation, tobacco above. A new vapes duty will also be introduced.
- Jobs – National Living wage and minimum wage increased. The minimum wage for 16-18-year-olds will rise from £10 an hour to £10.85, the National Living Wage will rise from £12.21 to £12.71 per hour.
- Savings – The tax-free cash ISA limit is being cut. People will be able to save £12,000 in cash ISAs and £8,000 in investments – currently, you can save £20,000.However, over-65s will be excluded from the new cap on cash ISAs. You can currently save up to £20,000 every tax year across any ISA accounts you may have.
- Motoring: Fuel duty has been frozen until September, but prices will rise in phases from there. Electric vehicle drivers will also face a new pay-per-mile charge from 2028.
- Small businesses – Business rates will be reduced for 750,000 retail, hospitality and leisure properties, which will be funded by an increase on premises worth more than £500,000.
- Read the full story: Budget 2025 LIVE: How will Rachel Reeves’ autumn spending plan affect you
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