The winners and losers of Labour’s first Budget

Telegraph Money reveals whether the Chancellor has left you better or worse off

The Chancellor has now delivered her blockbuster Budget that she said will raise taxes by £40bn.
Family wealth held in pensions has come under a shock attack in Rachel Reeves’s Budget as the savings will be within the scope of inheritance tax from 2027. Landlords also face tax rises as they will pay additional stamp duty on second homes, in a move which experts say will hurt renters. But at least the cost of a pint is going down.
Telegraph Money has looked at who the winners and losers are.
The Chancellor has announced an inflation-busting 6.7pc increase to the national minimum wage taking it to £12.21 an hour from April 2025, with £1,400 a year for a full-time worker. The wage for 18- to 20-year-olds will rise by £1.40 per hour. National wage growth eased to 4.9pc in the three months to July.
It was all but confirmed that the state pension will rise by 4pc in April, thanks to the triple lock. The increase will see the weekly benefit reach £230.30 for the full new flat-rate state pension with £460 extra a year. However, with income thresholds set to remain frozen, an individual receiving just the state pension will be taxed on their income from 2027.
The Carers Allowance earnings threshold has increased, with the change taking place from April 2025. It means carers can earn more and still receive the government allowance.
In welcome news for pub-goers the Chancellor has announced she is cutting draught beer duty to take a penny off the cost of a pint.
Ms Reeves has announced that relief on business rates – the tax paid on retail, hospitality and leisure properties – will continue at 40pc until 2025-26, up to a cap of £110,000 per business. From 2026-27 there will be two permanently lower tax rates.
Inheritance tax has long been thought to be in scope for reform. The big news is that unspent pensions will be within the scope of inheritance tax from April 2027. At the same time the thresholds for estates will remain frozen until 2030 meaning more are likely to be drawn into paying the tax.
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Pushing up the National Insurance rate that employers pay by 1.2 percentage points from 13.8pc to 15pc is a significant blow to businesses, which may push the cost on to employees resulting in reduced pay packets. If they don’t, they could pass it on to shareholders or consumers, resulting in lower dividends or higher costs. 
Ms Reeves has also reduced the threshold – the point at which employers pay NI on employees salaries – from £9,100 to £5,000. The move will raise £25bn for the Treasury.
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The Chancellor has announced an increase to capital gains, the tax paid on investment profits. While the rate paid on second homes has not risen, holders of shares and other non-property assets will likely see their tax bills rise as a result of the decision when they’re sold. The lower rate has risen from 10pc to 18pc, and the higher rate from 20pc to 24pc.
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Nestled in the inheritance tax reforms are changes to how the levy impacts farms. The agricultural allowance has been amended so that farmers with assets over £1m will be subject to a 20pc inheritance tax. They were previously exempt. The National Farmers Union has said it is a “shameless breaking of clear promises on agricultural property relief”. Adding it “will snatch away the next generation’s ability to carry on producing British food, plan for the future and shepherd the environment.”
While capital gains on properties hasn’t risen, the same can’t be said for stamp duty. The higher rate for additional dwellings – the stamp duty surcharge for second properties is going up by 2 percentage points, to 5pc. The change will happen overnight. Paul Johnson, of the IFS, warned that this tax increase would end up costing renters.
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While Ms Reeves has extended the freeze on fuel duty, drivers have still been caught in up in the Budget crosshairs. Petrol drivers will pay at least £100 more in tax the year after buying a car, while electric vehicles (EVs) have been spared from a significant raid, the Chancellor, our Industry Editor Matt Oliver reports.
While Labour committed to not raising taxes on working people, the Government is committing to the freeze on income tax until 2028. It means more people will be dragged into higher tax brackets, including many pensioners who will pay income tax for the first time. Even if you’re not dragged into a higher tax bracket, anyone whose pay increases over the next four years will end up paying more tax if they earn more than the personal allowance.
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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. However, this will make it more expensive for tenants to buy their home from the council. My colleague Ruby Hinchliffe broke the story last month.
Wheels down for private jet owners as Ms Reeves has unveiled 50pc increase in the rate of air passenger duty working out at around £450 per passenger. For those of us flying commercial Ms Reeves said the duty would rise by “no more than £2 for an economy class short-haul flight”.
Rachel Reeves said tax on hand-rolling tobacco will increase by 10 per cent while a flat rate levy will be imposed on all vaping liquids from October 2026. Last week the Government confirmed disposable vapes will be banned from June next year. My colleague Tom Haynes has written about why, as a signed up member of Vape Nation, he welcomes the ban.
The non-dom tax status will be scrapped from April next year. This will also remove the concept of domicile from the tax system. There has also been a crackdown on the use of overseas trusts to shield assets from UK inheritance tax.
Before winning the election Labour said it would reform carried interest relief – the tax due on the share of profits paid to investment fund managers. Ms Reeves has now done so. Previously subject to capital gains at rates of 18pc and 28pc, the tax will be a single rate of 32pc from April 2025. However, it is likely to rise further from April 2026 when it will be subject to a new regime.
Despite the concerns of independent tax advisors and teachers unions, the Government has ploughed ahead with its plan to levy 20pc VAT on private school fees from January 1. However military and diplomatic families are set to be spared from the tax raid. The Government confirmed the Continuity of Education Allowance, taxpayer-funded support that covers up to 90 per cent of boarding school fees, will increase to mitigate the impact of fees rising.