Housing, tax rises and pub pints: What Rachel Reeves' Budget means for Londoners
Rachel Reeves increased taxes by £40billion but promised to invest to "rebuild Britain" as she became the first woman in history to deliver Britain's Budget on Wednesday.
The Labour Chancellor vowed to put "more pounds in people's pockets" but insisted the Government needed to plug the £22billion blackhole in public finances.
She committed not to increase income tax or national insurance on employees , but businesses will be hit with a greater share of the burden to help fund stretched public services and invest in infrastructure.
Britain will borrow more than £32billion more over the next five years and the NHS will get a record £22.6billion increase in the day to-day health budget.
There was good news for London transport, with the Chancellor committing £485million for TfL's capital renewals programme and confirming HS2 will go to Euston.
Mayor of London Sadiq Khan said the cash "will help to support the crucial maintenance, renewal and growth of London's transport system".
Changes to borrowing rules will also allow her to pump billions of pounds into renewing crumbling schools and prisons and tackle NHS waiting lists.
"We will restore stability to our country again," Ms Reeves told the Commons.
"The scale and seriousness of the situation that we have inherited cannot be underestimated.
"Together, the black hole in our public finances this year, which recurs every year, the compensation payments which [the Conservative Government] did not fund and their failure to assess the scale of the challenges facing our public services means this budget raises taxes by £40billion.
"Any Chancellor standing here today would face this reality. And any responsible Chancellor would take action. That is why today, I am restoring stability to our public finances and rebuilding our public services."
Business Taxes
Ms Reeves confirmed a £25billion raid on employers' national insurance contributions, with higher rates and a lower starting threshold.
Businesses will be hit by a 1.2 percentage points increase in employers' NI, to 15%, from April 2025.
"I know that this is a difficult choice," the Chancellor said. "I do not take this decision lightly."
The Government will reduce the Secondary Threshold – the level at which employers start paying NI on each worker's salary – from £9,100 per year to £5,000.
Companies will also have to fork out for an inflation busting 6.7% minimum wage hike. Firms in the capital, where running costs are higher, are likely to be hit hardest by these changes.
However, the smallest businesses will be protected, the Chancellor said, as she announced the Employment Allowance would increase from £5,000 to £10,500. This means 865,000 employers won't pay any National Insurance at all next year and over 1 million will pay the same or less as they did previously, the Chancellor said.
"This will allow a small business to employ the equivalent of four full time workers on the National Living Wage without paying any National Insurance on their wages," Ms Reeves added.
Worker Taxes
In a boost for workers, the Government will not extend the freeze on income tax and national insurance thresholds beyond 2027/28.
The Chancellor said it would "hurt working people" to keep thresholds frozen.
Since 2010, workers earning more than £100,000 a year have had their personal allowance tapered away, meaning that for every £2 earned above the threshold, £1 of the allowance is removed.
"The previous government froze income tax and National Insurance thresholds in 2021 and then they did so again after the mini-budget," the Chancellor said.
"Extending their threshold freeze for a further two years raises billions of pounds - money to deal with the black hole in our public finances and repair our public services.
"Having considered the issue closely, I have come to the conclusion that extending the threshold freeze would hurt working people. It would take more money out of their payslips.
"I am keeping every single promise on tax that I made in our manifesto. So there will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government."
Inheritance Tax
Inheritance tax thresholds will be frozen for a further two years, until 2030. It means the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if it includes a home passed to direct descendants and £1million when a tax free allowance is passed to a surviving spouse or civil partner.
Non-Doms
The non-dom tax regime will be abolished from April 2025, the Chancellor announced.
A new, residence based scheme will be introduced "for those coming to the UK on a temporary basis".
To further encourage investment into the UK, the Government will also extend the Temporary Repatriation Relief to three years and expand its scope in measures it is claimed will raise £12.7billion over the next five years
Capital Gains Tax
Capital Gains Tax rates on carried interest will increase to 32% from April 2025 and from April 2026 the Government will deliver "further reforms to ensure that the specific rules for carried interest are simpler, fairer and better targeted", the Chancellor said.
House Prices - a hit to first time buyers in the capital
In a big blow to buy-to-let sector, the tax surcharge for second-homes, known as the "Higher Rate for Additional Dwellings", will increase by 2 percentage points, to 5% from Thursday.
"This will support over 130,000 additional transactions from people buying their first home, or moving home over, the next five years," Ms Reeves said.
Stamp duty rates start at £425,000 for first time buyers and £250,000 for everyone else. The Government will let them fall to £125,000 and £300,000 from April next year in a particular hit to buyers in London and the southeast where the average property price is £688,856.
The Chancellor vowed investment in housing , telling the Commons: "We will increase the Affordable Homes Programme to £3.1 billion, delivering thousands of new homes.
"We will provide £3 billion of support in guarantees to boost the supply of homes and support our smaller housebuilders. And we will provide investment to renovate sites across our country, including at Liverpool Central Docks where we will deliver 2,000 new homes, and funding to help Cambridge realise its full growth potential."
Ms Reeves also acknowledged the need to increase the supply of affordable housing, saying: "I can today confirm that the Government will reduce Right to Buy Discounts and local authorities will be able to retain the full receipts from any sales of social housing so that we can reinvest back into the housing stock and into new supply."
She added: "By doing this we will give more people a safe, secure and affordable place to live.
"We will provide stability to social housing providers, with a social housing rent settlement of CPI plus 1% for the next five years and we will deliver on our manifesto commitment to hire hundreds of new planning officers to get Britain building again.
"We will also make progress on our commitment to accelerate the remediation of homes following the findings of the Grenfell Inquiry, with £1 billion of investment to remove dangerous cladding next year."
Local Authorities
Councils in London are being pushed to the brink of bankruptcy by temporary accommodation and social care costs. The crisis has forced some town halls in the capital to request bailout loans from the government to balance their books.
Local authorities will get "a significant real-terms funding increase", Ms Reeves said, including a £1.3billion worth of grants to deliver essential services.
Some £230million has been allocated to tackle homelessness and rough sleeping, which is most acute in the capital.
There will be a £1billion to extend the Household Support Fund and Discretionary Housing Payments next year to help those facing financial hardship with the cost of essentials.
Rail and Restoration
There will be funding for some large infrastructure and growth projects. The Chancellor confirmed HS2 will go to Euston, committing the funding required to begin tunnelling work from Old Oak Common.
East-West Rail between Oxford, Milton Keynes and Cambridge will go ahead. The first services will run between Oxford, Bletchley and Milton Keynes next year and trains between Oxford and Bedford running from 2030, Ms Reeves added.
Road maintenance budgets will get a £500million boost next year to fix an additional one million potholes annually.
Cigarettes and Alcohol
Pints in London have already breached the £8 mark, while the average cost of a G&T over £10 in inner boroughs.
But there will be some relief for landlords and drinkers. Ms Reeves confirmed that alcohol duty rates on non-draught products will increase in line with RPI from February next year. But draught alcohol duty will be cut by 1.7%, which means a penny off a pint in the pub.
NHS and Carers
The NHS will get record £22.6billion increase in the day to-day health budget and a £3.1bn increase in the capital budget over this year and next year.
Some £1billion will be used to address the backlog of repairs and upgrades across the NHS estate.
A further £1.5billion will be for new beds in hospitals across the country and new capacity for over a million additional diagnostic tests to bring down waiting lists to no longer than 18 weeks.
Carers can now earn over £10,000 a year while receiving Carer's Allowance, the Chancellor announced. This will allow them "to increase their hours and keep more of their money", she added.
There were no surprises for pensioners in the Budget after the Government committed to the triple lock. Spending on the State Pension is forecast to rise by over £31billion by 2029-30.
While working age benefits will be uprated in line with CPI, at 1.7% the basic and new State Pension will be uprated by 4.1% in 2025-26.
Fuel Duty
Fuel duty will be frozen meaning no higher taxes at the petrol pumps next year in a boost for London drivers.
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