Budget 2025 Highlights: Essential Points You Need to Know

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ago 8 days

Chancellor Rachel Reeves has presented the key highlights of the 2025 budget, following an early report from the Office for Budget Responsibility (OBR). The budget outlines significant changes in the tax landscape and public spending policies intended to shape the nation’s economy in the coming years.

Budget 2025 Highlights: Essential Points You Need to Know

Tax Provisions

Tax Thresholds Frozen: Higher tax bands will remain unchanged for an additional three years, impacting taxpayers’ income. This move is expected to generate £8 billion.
Increased Gambling Taxes: The gambling sector will face new taxation, anticipated to raise over £1 billion.
Electric Vehicle Mileage Tax: Electric car owners will incur a 3p charge per mile driven, potentially raising £1.4 billion.
Capital Gains Tax Changes: A new tax relief for employee ownership trusts is set to increase revenue by £900 million.
Salary-Sacrifice Pension Contributions: From April 2029, contributions over £2,000 will be subject to National Insurance, estimated to generate £4.7 billion.

Benefits and Welfare Changes

Removal of Two-Child Benefit Cap: Effective April 2026, the current restrictions on benefits for third and subsequent children will be discarded, costing the government £2.3 billion. This initiative aims to alleviate child poverty.
Cash ISA Reforms: The tax-free allowance for cash ISAs will decrease from £20,000 to £12,000 annually, encouraging investment in stocks and shares ISAs. However, individuals over 65 will maintain the higher limit.

Fuel Duty and Property Taxes

Fuel Duty Freeze: Fuel taxation on diesel and petrol is frozen at 52.95p per litre until September, costing the government £2.4 billion next year.
Mansion Tax Introduction: Homes valued over £2 million will incur new taxes, ranging from £2,500 to £7,500, projected to raise £400 million.
Stamp Duty Holiday for New Listings: Companies newly entering the London Stock Exchange will benefit from a three-year stamp duty exemption.

Economic Growth and Inflation Outlook

The economy is projected to expand by 1.5% this year.
Inflation forecasts have been adjusted to 3.5% for this year and 2.5% for the next, following rises in wages and food prices.
Defense spending is allocated at 2.6% of GDP.

Regional Funding Initiatives

An additional £317 million is designated for Northern Ireland.
Welsh government will receive £505 million.
Scottish government benefits from £820 million.
Furthermore, £13 billion in “flexible” funding is available for seven regional mayors to invest in skills and infrastructure.

This budget underscores the government’s commitment to balancing growth, public support, and fiscal responsibility, making it one of the most significant economic plans in recent history. As developments unfold, further updates will be provided.