UK's 2025 Budget: Tax Hikes and Freezes Explained

The UK's finance minister, Rachel Reeves, recently shared a budget plan that includes several tax changes. These changes aim to bring in more money for the government. The Office for Budget Responsibility (OBR) shared some details ahead of time, calling it a "technical error" later. One big change is the freeze on income tax thresholds until 2030/31. This means people will pay more tax as their incomes grow. Another new tax will target expensive homes worth over 2 million pounds. This tax will start in April 2028 and add to existing local taxes. Fuel duty rates will stay frozen, a move that has been in place since 2011. This freeze is likely to avoid driver protests. However, new charges for electric and hybrid cars will start in April 2028. These charges aim to make up for lost fuel duty revenue as more people switch to electric vehicles. Dividend tax rates will also go up by 2 percentage points. This means people who earn money from investments will pay more tax. Additionally, gambling duties will increase, bringing in more money for the government. These changes show a mix of new taxes and continued freezes. The goal is to raise more money, but it also means higher costs for many people. It's important to think about how these changes will affect different groups and the economy as a whole.