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Chancellor unveils series of tax hikes to fill black hole in public finances in addition to ditching two-child benefit cap and changes to ISAs
Athena Stavrou,David Maddox,Caitlin Doherty,Kate Devlin,Alex Ross,Millie CookeWednesday 26 November 2025 13:19 GMTComments
CloseRachel Reeves responds to 'deeply disappointing' OBR Budget leak
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Rachel Reeves has started delivering her long-awaited Budget - less than an hour after an error by the Office for Budget Responsibility (OBR) revealed her tax hikes.
The chancellor is giving her statement to MPs in the House of Commons, with her set to announce £26bn of tax rises.
It comes after an error by the OBR leaked her plans early as part of its fiscal document usually published after the Budget. The document confirmed the chancellor will extend the existing freezes to personal tax thresholds for another three years until 2030-31.
After the OBR revealed it had reduced expectations for productivity, Ms Reeves, while opening her statement to the House, vowed to “beat the forecasts again”.
“These forecasts are the Tories’ legacy not Britain’s destiny,” she said as she also blamed Brexit and the pandemic.
Earlier, in a video shared on Wednesday morning, Ms Reeves acknowledged public anger and frustration at “unfairness in our economy”, as she vowed to take “fair and necessary choices” in today’s announcement.
Ms Reeves is looking to plug the gap in the country’s finances worth billions, after an apparent government U-turn on the idea of bringing in an increase to income tax.
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Key Points
- Reeves blames Brexit and Covid for productivity growth slowing
- Income tax thresholds to freeze
- Cash Isa limit cut – except for pensioners
- OBR publishes forecasts before Budget
- Full Fact to analyse Budget speech live
- Reeves takes swipe at Farage as she unveils fresh sanctions on Russia
Reeves takes swipe at Nigel Farage as she unveils fresh sanctions on Russia
The Independent’s political correspondent Millie Cooke:
Rachel Reeves has taken a jab at Clacton MP Nigel Farage as she unveiled fresh sanctions on Russia."We are ramping up sanctions on Russia and we are freezing known Russian assets.
But let me be clear, I don't actually mean the honourable member for Clacton", the chancellor said.It comes just days after Reform's former party leader in Wales, Nathan Gill, was jailed last week for taking bribes from Russia.
Gill, 52, was sentenced to 10 and a half years in prison at the Old Bailey on Friday after previously pleading guilty to eight counts of bribery on dates between 6 December 2018 and 18 July 2019.
His activities included making pro-Russia statements about events in Ukraine in the European parliament and in opinion pieces for news outlets, for which he was paid £40,000.
Joe Middleton26 November 2025 13:17Income tax thresholds to freeze, Reeves confirms
Rachel Reeves has confirmed she is freezing income tax thresholds for a further three years beyond 2028 in her Budget.
By not increasing the thresholds, she will benefit from a process called “fiscal drag”, where as wages go up people are dragged into paying tax for the first time or shifted into a higher rate.
The OBR says that Reeves’ decision to freeze tax thresholds in this Budget from 2028-29 onwards will raise £8bn in 2029-30.
It also “contributes to around 780,000 more basic-rate, 920,000 more higher rate, and 4,000 more additional-rate taxpayers by 2029-30 than in the (OBR’s) March forecast.
Athena Stavrou26 November 2025 13:14Luxury cars to be removed from Motability scheme
Luxury cars will no longer be available for Motability recipients.
Under the Motability scheme, personal independence payment claimants with serious mobility problems can lease a new vehicle, if they receive the higher mobility rate of the benefit.
Chancellor Rachel Reeves has announced changes to the scheme, following reports that some claimants have been able to access high-end cars such as Mercedes and BMWs.
Athena Stavrou26 November 2025 13:12Digital ID will crack down on illegal migration and clean up high streets, Ms Reeves claims
The Independent’s Whitehall Editor Kate Devlin reports:
The introduction of Digital ID will break the link between illegal migration and illegal working, Ms Reeves said.
She also said it would “crack down on the illicit businesses that blight our high streets and undercut legitimate firms, enforcing the minimum wage, investigating dodgy businesses, and increasing scrutiny of the gig economy” as well as “tracking down fraudulent business owners who vanish without paying their taxes”.
Joe Middleton26 November 2025 13:12Analysis: OBR leak hands Badenoch advantage in her Budget response
The Independent’s political correspondent Millie Cooke reports:
The OBR leak has handed Kemi Badenoch a major advantage today.
In an unprecedented situation, the leader of the opposition has had more than an hour to pore over the Budget after the OBR accidentally published its response to the measures in advance. In theory, this should mean Mrs Badenoch can give the performance of a lifetime when she stands up to respond to Ms Reeves' statement in the Commons.
Kemi Badenoch in the Commons on Wednesday (House of Commons/UK Parliament)Alex Ross26 November 2025 13:11Millions to be invested into NHS
As expected, Rachel Reeves has outlined changes to NHS spending.
When speaking about cutting inefficiencies across government, she said she would reinvest all of these savings back into the NHS.
She promised more nurses, more GPs more appointments.
She also said there would be £300 million of investment in technology to improve patient services, and 250 new neighbourhood health centres which will expand more services into communities.
(PA Wire)Athena Stavrou26 November 2025 13:10Infected blood compensation payments will not be subject to inheritance tax
Rachel Reeves has announced that compensation paid out for victims of the infected blood scandal will not be subject to inheritance tax.
The chancellor told the Commons that the issue had been raised to her by MPs, and the payments will be exempted from the tax "regardless of the circumstances in which those payments are passed down to children".
Rachel Reeves delivering her Budget (House of Commons/UK Parliament)Caitlin Doherty 26 November 2025 13:09Reeves vows to find £4.9bn of efficiencies
Rachel Reeves has vowed to save billions in cutting inefficiencies across government
“At the spending review I set an ambitious target of £14bn of efficiencies per year,” she said.
She added: “At this Budget I will find a further £4.9bn of efficiencies by 2031 - getting rid of Police Crime Commissioners, cutting costs of politics and local government, and selling government assets we no longer have any use for.”
Athena Stavrou26 November 2025 13:08Funding for school libraries and playgrounds
The Independent’s political correspondent Caitlin Doherty reports:
The chancellor has announced £5million for libraries in secondary schools, on top of £10million that had already been announced for primary school libraries.
On top of this, Rachel Reeves has said that there will be £18million to improve and upgrade playgrounds across England.
Joe Middleton26 November 2025 13:05Analysis: How much can you save in a cash ISA after Budget measure
The Independent’s business editor Karl Matchett reports:
The cash ISA limit being cut was expected, though it's been framed slightly differently - £8,000 of the total £20,000 annual allowance is reserved for investing, effectively - so you can still save £12k in a cash version (the limit we expected), then the remainder in a stocks and shares ISA.
You also have the option of a Lifetime ISA of course, which can take a maximum of £4,000 annually and gets a government top-up.
If you don't max out your ISA each year then the change isn't likely to immediately impact you, but it still will impact a large number of individuals: ISA provider Trading 212 have confirmed to The Independent that more than two in five Cash ISA users (40.8 per cent) paid in more than £12,000 annually to their account.
One notable addition that we hadn't heard about previously is the apparent exemption for over 65 - Rachel Reeves says they will retain the full £20k allowance for cash ISAs if required, which makes good sense as those with a shorter timeframe do not always want to take on the additional risk of investing in non-cash assets.
We await confirmation if that is for over 65s now, or all people as they hit that over-65 threshold of course.
Alex Ross26 November 2025 13:02Newer1 / 5OlderMore about
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