UK Treasury chief Reeves announces £40bn tax hikes in new budget

British Finance Minister Rachel Reeves presented her budget plans on Wednesday, revealing a £40bn increase in taxes.

In the Labour Party's first Autumn Statement in 14 years, Reeves also said National Insurance contributions for employers will increase by 1.2% to 15% from April 2025, which she noted will raise £25bn a year for the government, News.Az reports, citing foreign media.

The Chancellor further noted there will be an increase in Capital Gains Tax, a freeze on fuel duty in 2025 - and said there will be an introduction of VAT on private school fees.

Reeves also said that defined contribution pension pots will be subject to inheritance tax liability at the death of the holder from April 2027.

Sterling has pared this morning's losses against the dollar and fell only modestly against the euro, as the UK budget announcement keeps the British economic outlook intact.

That's according to FX market analyst Kyle Chapman at Ballinger Group, who also said that Reeves has successfully avoided a crisis.

"There has been little reaction from the announcement itself, and the majority of the 0.35% drop in GBP/EUR all played out this morning. The major details were all leaked in advance, the OBR has retained its medium-term growth forecasts, and the impact of the capital spending plans are likely to materialise only in the longer term. That makes it a non-event for sterling, and markets can switch back to focusing on monetary policy.

"The tax increase is a touch higher than most were expecting and there is bound to be some backlash from businesses about the employer's NI increase, but the OBR appears confident that the tax rises will not derail a strong increase in growth momentum next year. However, it is worth noting that their forecasts are far more optimistic than most."

News.Az