Rachel Reeves' latest Budget has introduced a complex package of measures, marked by significant tax adjustments, welfare policy shifts, and crucial economic warnings. Despite the Chancellor's stated aim to 'break the cycle of austerity' and asking 'everyone to make a contribution', critics argue many decisions represent a 'stealth raid' on various groups, while some reforms aim to address social inequalities and internal party pressures.

One of the most contentious announcements was the extension of the income tax basic rate threshold freeze at £12,570 until 2030/31. This move is projected to drag over one million additional pensioners into paying income tax, leading to a total of 10 million retirees facing income tax by 2030/31. It also impacts working people, with an estimated 5.2 million more individuals brought into the tax net between 2022/23 and 2030/31 due to previously announced freezes and this extension. The Office for Budget Responsibility (OBR) indicated an additional 780,000 people will begin paying income tax and 920,000 will move into higher tax brackets by 2029-30. Former pensions minister Sir Steve Webb highlighted that the full new state pension is set to exceed the personal allowance from 2027/28, further exacerbating the tax burden on pensioners. While the Treasury stated it would simplify administrative processes for affected pensioners, no exemptions were offered. This decision drew immediate condemnation from the Tories, who accused Reeves of breaking manifesto promises, and from organizations like the Institute for Fiscal Studies (IFS) and Age UK, which branded it 'deeply regrettable' for its impact on low and modest-income older individuals. Maria MacDonald, a sales director, voiced a common concern, questioning whether increased earnings, like bonuses, would result in 'losing more' due to higher taxes and the potential loss of childcare support near the £100,000 threshold.

A major policy reversal saw Rachel Reeves lift the two-child benefit cap, a move projected by the OBR to cost taxpayers £3 billion annually by 2030. This change is expected to lift 450,000 children out of poverty and increase benefits for 560,000 families by an average of £5,310 by 2029-30. The OBR also forecasts 25,000 additional families will begin claiming Universal Credit. Reeves defended the decision, arguing the previous cap 'punished parents' choices,' with children paying the price. However, Conservatives, including Kemi Badenoch, criticized the move as caving to Labour MPs' pressure and abandoning £5 billion in planned welfare cuts, accusing Labour of 'buying votes' with taxpayer money. John McDonnell, a former Shadow Chancellor, lauded the campaign to scrap the 'appalling policy.' Politically, the abolition, which will cost an estimated £3.5 billion, was widely seen as a measure to appease mutinous Labour MPs threatening to oust the Prime Minister and Chancellor. Scottish and Welsh Labour leaders welcomed the measure, with Anas Sarwar hailing it as a 'Labour budget rooted in Labour values' and contributing to child poverty reduction.

Further tax increases will affect working graduates, with the earnings threshold for Plan 2 student loans frozen at £29,385 for three years from April 2027 to April 2030. This measure, set to raise £7.4 billion over six years, means more lower earners will be drawn into repayments, and existing payers will pay more over the lifetime of their loans. Shadow Education Secretary Laura Trott labeled this a '£7.4 billion tax raid,' accusing Labour of a 'disgraceful betrayal of a generation.' Alex, a 24-year-old graduate, expressed feeling 'let down by the budget,' highlighting struggles in the job market, housing affordability, and the inability to pursue postgraduate studies due to financial constraints, advocating for tax breaks for younger people and improved public transport.

Reeves also introduced a 'High Value Council Tax Surcharge' (dubbed a mansion tax) in England from April 2028. Properties worth over £2 million will incur an annual charge of £2,500, rising to £7,500 for those over £5 million. The aim is to tackle wealth inequality and raise £400 million by 2031, targeting less than 1% of properties, particularly in London and the South East. However, the OBR estimates a £300 million loss in stamp duty and capital gains tax revenue over the next three years due to the tax's anticipated impact on high-end property sales. Experts from the IFS and Sotheby's International Realty warned the tax's design 'leaves much to be desired,' could 'subdue' the market, and would affect 'perfectly normal London houses' rather than solely the ultra-rich. Critically, Ms Reeves, who had previously opposed such a tax for years, found herself imposing one to appease her party's Left-wing.

In adjustments affecting work and lifestyle, the deduction from Income Tax for non-reimbursed home working expenses will be scrapped from April next year. While employers can still reimburse eligible costs tax-free, individual basic rate taxpayers previously claiming £6 a week could lose up to £62.40 annually. Reeves, who advocates for civil servants returning to the office to boost productivity, aims to end the relief primarily designed for pandemic-era home working.

Average household energy bills are projected to fall by £150 a year from April, primarily through scrapping the 'energy company obligation scheme' and partially transferring green levies onto general taxation. This move, while aimed at reducing direct consumer costs, means some expenses will temporarily be borne by taxpayers for three years, raising OBR concerns about higher borrowing. Despite this, energy charges remain significantly higher than when Labour came to power, despite prior pledges to cut them by £300. In a controversial move for green transport, a 3p per mile charge was imposed on electric vehicle (EV) drivers, while fuel duty for petrol and diesel was frozen. Kate Coyle, an EV driver relying on public chargers, highlighted the financial strain of an extra £300-£600 per year, compounded by 20% VAT on public charging, and the discrepancy with frozen fuel duty for combustion vehicles.

Regarding public services, the government announced it would take full responsibility for Special Educational Needs and Disability (SEND) spending from local councils starting April 2028. The OBR warned of a potential £20 billion 'timebomb,' comprising annual costs reaching £6 billion by 2028 and historical council deficits projected at £14 billion. These accumulated deficits, currently held off council balance sheets by an accounting 'override' set to expire in 2028, pose a significant fiscal risk. If fully funded through the Department for Education's core budget without reforms, it could lead to a 4.9% real fall in mainstream school spending per pupil. Reeves emphasized reforms would focus on 'creating a system that works' and integrating children into mainstream schools where possible, rather than solely on money. The IFS urged urgent reforms to manage the escalating costs driven by surging demand for Education and Health Care Plans (EHCPs).

In measures affecting business, pensions, and savings, Rachel Reeves eased inheritance tax rules on agricultural property after farmer protests. From April, married couples, civil partners, or those with deceased spouses can transfer up to £1 million of full inheritance tax relief to each other, allowing £2 million of farmland to be passed on tax-free. While praised by some as a 'sensible change,' the National Farmers' Union argued it 'goes nowhere near far enough' to alleviate the burden on the elderly and vulnerable, only partially addressing the concerns raised by the previous October Budget's move to include farms in IHT rules.

Pensions will also see changes, as from April 2029, a new £2,000 threshold will be applied to salary-sacrificed pension contributions, above which contributions will be subject to National Insurance. This directly impacts individuals like accountant Dean Harwood, who uses salary sacrifice to invest 25% of his earnings into his pension, arguing the change discourages crucial retirement saving and treats pensions as a source to be 'raided.'

Regarding savings, the maximum amount people can put into Cash ISAs will be cut to £12,000 from April 2027. However, a significant exemption was made for those over 65, who will continue to be able to save up to £20,000 annually. Trevor Adams, 68, welcomed this, noting it allowed him to continue his established savings strategy without the risks associated with stocks and shares at his age.

The OBR's assessment painted a cautious economic picture, concluding that none of the Budget's 88 measures are likely to have a 'material effect' on boosting growth, forecasting GDP to be 1% lower this Parliament than predicted a year ago. The Budget, marked by 43 new or raised taxes, was internally described as a 'Budget for self-preservation' by a Cabinet source, highlighting the pressure Ms Reeves faced from mutinous MPs and the need to avoid political suicide. Furthermore, the OBR issued a stark warning about a potential burst in the AI 'bubble' on the stock market. A worst-case global correction, involving a 35% slump in global and UK share prices, could lead to a £26 billion borrowing shock, reducing the Chancellor's fiscal 'headroom' from £22 billion to £6 billion and impacting UK households directly. Warnings from the Bank of England, IMF, and ECB underscored the risks of 'stretched' market valuations and 'fear of missing out' driving tech stock rallies, emphasizing the volatile backdrop against which these fiscal decisions were made.