Budget at a Glance
- National Pensioners Convention
- 42 minutes ago
- 4 min read
Chancellor of the Exchequer Rachel Reeves announced a Budget that was a mixed bag for older people. But the freeze on the tax allowance thresholds - the point at which we start to pay tax - is likely to have an increasingly hard impact upon the incomes of retired people over the next three years.
Here is a summary of the main points:
Personal Taxation
National Insurance (NI) and income tax thresholds frozen for extra three years beyond 2028, dragging more people into higher bands over time
Amount under-65s can put into cash Isas (Individual Savings Accounts) capped at £12,000 a year from April 2027, with the rest of the £20,000 annual allowance reserved for investments
2 percentage point rise to the ordinary and upper tax rates on dividend income from April, and all rates on savings income from April 2027
Wages, entitlements and pensions
Cap limiting households on universal or child tax credit from receiving payments for a third or subsequent child to be scrapped from April
Legal minimum wage for over-21s to rise 4.1% in April, from £12.21 to £12.71 per hour, with the wage for 18 to 20-year-olds rising from £10 to £10.85
Basic and new state pension payments to go up by 4.8% from April, more than the current rate of inflation, under the "triple lock" policy
Amount people can "sacrifice" from their salary - thereby avoiding NI on pension contributions - capped at £2,000 a year from 2029
Help to Save scheme, which offers people on universal credit a bonus on savings, extended and expanded beyond 2027
Housing and Property
Properties in England worth more than £2m to face a council tax surcharge of £2,500 to £7,500, following a revaluation of homes in bands F, G and H
Tax charged on rental income increased by 2 percentage points, from April 2027
Transport
5p "temporary" cut in fuel duty on petrol and diesel extended again, until September 2026, before it rises again over six month period
A new mileage-based tax for electric vehicles and plug-in hybrid cars to be introduced from 2028
Regulated rail fares for journeys in England frozen next year for the first time since 1996 (there have been periods when prices rose by less than inflation)
Premium cars to be excluded from Motability scheme, which allows people on certain disability benefits to lease vehicles more cheaply
Household Bills
· The government estimate their decisions will reduce energy costs by £150 next April
· Green levies will be removed from energy bills and instead funded through general taxation, which the Treasury claims will save households £88 per year.
· An additional £59 annual saving will result from scrapping a customer-funded scheme aimed at helping low-income households insulate their homes.
Drinks, Alcohol and Tobacco
· The tax on sugary drinks will now include pre-packaged milkshakes and lattes from 2028, overturning a previous exemption.
· Tobacco duty will rise by 2% above the higher Retail Price Index (RPI) rate of inflation.
· Alcohol duty, including that on draught drinks, will increase in line with the higher RPI measure in February.
UK Growth, Inflation and Debt
· The Office for Budget Responsibility (OBR) forecasts UK economic growth of 1.5% this year, an upgrade from the 1% predicted in March.
· Average growth between 2026 and 2029 is now expected to be 1.5% per year, down from a previous estimate of 1.8%.
· Inflation is predicted to average 3.5% this year, fall to 2.5% next year, and return to the government's 2% target in 2027.
Business
· Thresholds for National Insurance contributions paid by employers will remain frozen until 2031, which will increase costs as wages rise over time.
· The tax exemption for small packages from overseas retailers valued under £135 will be abolished from 2029, following concerns it disadvantages UK businesses.
· The remote gaming duty on online casino betting will rise from 21% to 40% from April 2026.
· General betting duty on sports betting will increase from 15% to 25% online from April 2027, with horse racing remaining exempt.
Other Measures
· Regional mayors in England will have the power to introduce taxes on overnight stays in hotels and holiday lets, similar to schemes in Scotland and Wales.
· Free apprenticeship training will be available for under-25s at small and medium-sized businesses.
· Any 18 to 21-year-olds on Universal Credit who are neither working nor learning for over 18 months will be offered six-month paid work placements; refusal may result in loss of benefits.
· A new tax on English universities’ tuition income from overseas students will be set at £925 per student per year from August 2028.
· The cost of a single NHS prescription in England will remain at £9.90 for another year; prescriptions are still free in Wales, Scotland, and Northern Ireland.
· £5 million will be allocated to secondary school libraries, with an additional £18 million for improving and upgrading playgrounds across England.
· Compensation payments for those affected by infected blood will be exempt from inheritance tax.
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