Chancellor Rachel Reeves set out her second Budget on 26 November, after the Office for Budget Responsibility (OBR) briefly published its Economic and Fiscal Outlook ahead of the statement. The OBR withdrew the document and apologised; Reeves told MPs it was a serious error. Reuters reported a short-lived uptick in sterling and gilt prices following the leak.
The OBR’s November forecast frames the fiscal stance: tax measures announced at this event rise to £26bn in 2029–30, combining £15bn from personal taxes and £11bn from other changes. The tax-to-GDP ratio is projected to reach around 38.3% by 2030–31, while the Government meets its fiscal mandate to run a current budget surplus in 2029–30 with a £22bn margin. Real GDP growth is forecast at 1.4% in 2026 and 1.5% a year thereafter; CPI inflation is expected to be 2.5% in 2026 and 2.0% from 2027. The OBR also highlights weaker productivity, reducing receipts by roughly £16bn in 2029–30 compared with March.
Personal tax thresholds are extended for a further three years: the income tax personal allowance (£12,570), higher-rate threshold (£50,270) and additional-rate threshold (£125,140) now remain fixed until April 2031. The National Insurance contributions (NICs) secondary threshold for employers stays at £5,000 over the same period. The OBR estimates these freezes will mean, by 2029–30, around 780,000 more basic-rate, 920,000 more higher‑rate and 4,000 more additional‑rate taxpayers than under the previous schedule. In student finance, the Plan 2 loan repayment threshold is frozen at £29,385 for three years from April 2027.
Income from assets will be taxed more: from April 2026 the dividend ordinary and upper rates rise by 2 percentage points to 10.75% and 35.75% respectively, with the additional rate unchanged at 39.35%. From April 2027, basic, higher and additional rates on savings and on property income increase by 2 percentage points to 22%, 42% and 47%. The ordering of reliefs and allowances also changes from April 2027 so that they apply first to other income before property, savings and dividends. HM Treasury says this narrows gaps between the taxation of work and asset income.
Property taxation includes a High Value Council Tax Surcharge on homes worth £2m or more in England from April 2028, with revenue collected by local authorities on behalf of central government. Treasury costings show receipts reaching about £400m a year by 2029–30, with consultation on implementation due in the new year. The OBR expects the higher property tax rates to trim house price growth by around 0.1 percentage points a year from 2028.
Motoring and transport policy is reshaped. A new Electric Vehicle Excise Duty (eVED) will apply to battery electric and plug‑in hybrid cars from April 2028, charged per mile and set at roughly half the fuel duty rate paid by petrol and diesel drivers; an average EV driver is expected to pay about £240 a year, with a lower rate for plug‑in hybrids. The Government extends the 5p fuel duty cut until 31 August 2026 and cancels uprating in 2026–27, before a staged return to March 2022 rates by March 2027. Regulated rail fares in England are frozen for one year from March 2026, and NHS prescription charges are held at £9.90 for 2026–27. Treasury analysis suggests the package reduces CPI inflation by 0.4 percentage points in 2026–27.
On welfare, the Budget removes the two‑child limit in the Universal Credit Child Element from April 2026, with HM Treasury stating this will lift around 450,000 children out of poverty, rising to about 550,000 alongside other measures announced this year. The Government cites funding from Motability relief reforms and expanded anti‑fraud activity. Additional DWP steps extend targeted case reviews and adjust Housing Benefit rules in supported and temporary accommodation to improve work incentives.
For businesses, the Treasury confirms a 40% First Year Allowance for main rate assets from 1 January 2026, with main rate writing‑down allowances reduced from 18% to 14% from April 2026. Ministers also trail a UK Listing Relief from Stamp Duty Reserve Tax and R&D system reforms, alongside permanent business rates support for retail, hospitality and leisure funded by higher rates on the most expensive properties, such as large online warehouses.
Pension and labour market measures include capping NICs relief on salary‑sacrificed pension contributions to the first £2,000 per employee from April 2029; above that, both employer and employee NICs will apply. HM Treasury says around 74% of basic‑rate taxpayers who use salary sacrifice are unaffected. The Government also confirms the State Pension triple lock for this Parliament, with a 4.8% uprating from April 2026 worth up to £575 a year for pensioners.
Implementation will run across multiple finance bills and consultations. The eVED and High Value Council Tax Surcharge each proceed via detailed design work in 2026–27, while many tax changes take effect in April 2026 or April 2027. The OBR notes the Government plans to legislate so it assesses the fiscal rules once per year rather than twice, while continuing to produce two EFOs annually. For departments, the Budget introduces additional efficiency targets from 2028–29; for employers and payroll teams, the extended threshold freezes and the 2029 pension salary‑sacrifice cap require forward budgeting; for landlords and higher‑asset households, higher non‑labour income rates and the new council tax surcharge will influence returns and cashflow from the late 2020s.