The Chancellor has announced Labour's Budget - but who will benefit the most and who is set to lose out?
In her first Budget since becoming Chancellor, Rachel Reeves has set out the government’s financial plans for tax, spending and policies. Today's Budget was much anticipated as Reeves said she would use it to put "pounds in pockets" and "rebuild Britain" after the mess left behind by 14 years of Tory rule.
However, Prime Minister Sir Keir Starmer warned the nation to prepare for “tough decisions” and there are people who will benefit from the changes set out and those who won't. Here we take a look at who is classed as a winner in today's Budget and those who are set to lose out.
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Winners
Carers
From April 2025, Carers will be able to earn more each week and keep their Carers Allowance benefit. Currently, carers can earn up to £151 a week after tax, National Insurance, pension contributions, and allowable expenses. However, from next year, this will rise by £45, going to £196 a week. Rachel Reeves says it is the equivalent of an extra 16 hours a week of work at minimum wage.
State pensioners and benefit claimants
Rachel Reeves confirmed today that benefit payments would be rising by 1.7% from April 2025, while state pension payments would be rising by 4.1% under the Triple Lock promise. The rise for state pension payments will see 12million people on the New State Pension get an uplift of £470 a year.
Working people
The freeze to income tax brackets will not be extended after 2028 and instead will rise each year by the rate of inflation from 2028-29. The personal allowance currently sits at £12,570 a year, and you only pay tax on the income you earn over this. You pay the 20% basic rate of Income Tax. There is a higher rate of 40% which is paid on earnings above £50,270, while anything above £125,140 is taxed at the 45% additional rate. Overall, this means more people will not be dragged into paying tax for the first time - or a higher rate of tax, if their wages rise.
Meanwhile, the national minimum wage will rise by 6.7% from April 2025. It will mean that the national minimum wage for over 21s will increase from £11.44 to £12.21 an hour - a boost of £1,400 a year for a full-time worker.
Drivers
Drivers have been spared a major hike in fuel duty as the Chancellor has kept the fuel duty freeze - which has been in place since 2011 - and has also kept the 5p cut to its current rate of 52.95p per litre. The 5p cut will also be extended before March 2025 when it was set to end.
Young workers
The Chancellor confirmed this week - and reiterated this in the budget - that the National Living wage and minimum wage would be rising in April 2025 by 6.7%. Labour says this will mean an extra £1,400 a year for a full-time worker earning the main minimum wage rate. The minimum wage is the rate paid to people under the age of 21 years, while the National Living Wage is for those above. The rise in minimum wage will benefit young workers in the UK.
These are how much they will be rising next year:
- National Living Wage - 21 and over: £11.44 an hour to £12.21 an hour
- National Minimum Wage: 18 to 20: £8.60 an hour to £10 an hour
- Under 18: £6.40 an hour to £7.55 an hour
- Apprentice: £6.40 an hour to £7.55 an hour
People who drink pints at a pub
Draught duty on alcoholic drinks below 8.5% will be cut by 1.7% which the Chancellor said will see “a penny off a pint in the pub”. Reeves said the move was made because "nearly two-thirds of alcoholic drinks sold in pubs are served on draught". So the move will support pubs and businesses.
Losers
Investors
The lower rate of Capital Gains Tax (CGT) will rise from 10% to 18% while the higher rate will go from 20% to 24%.
Capital Gains is a tax charged if you sell, give away, exchange, or dispose of an asset—such as a second home, shares in companies, art, or jewellery - and make a profit or "gain." The tax applies to individuals, but it also applies to company owners, partners in a business, and self-employed people.
Chancellor Reeves said the relief for people selling their businesses will be held at 10% this year, rising to 14% in 2025 and 18% in 2026. The lifetime limit for business asset disposal relief will stay at £1 million. Despite these rises, Reeves said that the UK will still have the lowest CGT rate of any European G7 economy.
Businesses
Employers' national insurance contributions will rise by 1.2 percentage points to 15% in April 2025 up from 13.8% now, and the threshold for paying them will fall from £9,100 per year to £5,000.
Smokers/vapers
The price of cigarettes is rising this evening after Reeves confirmed a hike in Tobacco Duty today with a 10% increase on hand-rolled tobacco. She also confirmed that the government will renew the tobacco duty escalator at Retail Price Index (RPI) plus 2% for the remainder of parliament. According to the smoker's lobby group Forest, the illustrative tax increase is 54p per 20 cigarettes and £2.33 for 30g of hand rolling tobacco. The new price for a 20 pack of cigarettes will rise from £15.88 to £16.42 this evening based on Office of National Statistics (ONS) data.
Vaping was also targeted in Labour's budget. The Chancellor has also announced a “flat rate duty” on vaping liquid from October 2026, which will add £2.20 per 10ml of vaping liquid and will add an equivalent one-off increase in tobacco duty to maintain the incentive for smokers to give up smoking. The new vaping levy follows a previous pledge by the Conservative government to do so, with the latest increases coming into effect from April 2026. It will introduce a toll of £1-3 per 10ml vape liquid, increasing depending on nicotine levels.
Wine and spirits drinkers
Alcohol duty rates on non-draught products will increase in line with RPI from February next year. The latest hikes to duty on wine and spirits follow increases in August last year that were the largest in almost 50 years, adding 20% on more than 85% of all wines on the UK market and more than 10% to duty paid on full strength spirits. Alcohol duty is paid by manufacturers when they make their products. Due to their stronger alcohol content, spirits and wines are generally taxed more heavily than ciders and beer.
Those buying second homes
Stamp duty is a tax that is charged when you buy a property in the UK, with different rules for first-time buyers, home movers and people buying a second home. From tomorrow, those purchasing additional properties will have to pay a 5% stamp duty surcharge. This is a two percentage point increase from the current level of 3%.
Council house tenants buying their council home
Restrictions will be announced on the Right To Buy scheme, which allows council house tenants to buy their properties. However, details on this have not been confirmed as of writing.
Non-doms
Reeves announced that the "non-dom" status - which means claimants can avoid paying tax in the UK on overseas earnings - will be abolished from April 2025. Non-dom describes a UK resident whose permanent home - or domicile - for tax purposes is outside the UK.
A non-dom only pays UK tax on the money they earn in the UK. They do not have to pay taxes to the UK government on money made elsewhere in the world. The Tories previously said the status would be "phased out"; however, Labour said in its manifesto that it would "toughen" the existing Tory plans.
Holidaymakers
Air passenger duty (APD) will rise, adding up to £2 to the cost of an economy ticket for a short-haul flight, while private jet users will face a 50% hike. APD rates are based on the length of the flight and the class of cabin.