After all the rumours and leaks, the business community listened with its head in hands yesterday braced for what was due to be another pickaxe to its aspiration.
The expectation was that Rachel Reeve’s budget would tax air, breathing, hands, moving and looking at things. Dogs and cats would be on the list. And so would carpets.
That didn’t quite happen - although the above hasn't been ruled out.
Reeves delivered her second Budget with £26 billion in tax rises, doubling fiscal headroom. The Office of Budget Responsibility 'accidentally' published the whole thing an hour early. Clap clap for governance.
The budget still hit landlords, upper‑middle earners, savers and entrepreneurs, but it was not the complete thick-brained breeze block blow to the back of the head we were led to expect.
For weeks, Westminster briefed nightmare scenarios: income tax hikes, wealth taxes, pension caps, National Insurance on LLP partners. Then most of it didn't happen.
Was it expectation management? Float the worst, deliver something less painful, call it restraint.
That would have been a strategic move...
Or was it another cockup? Just like the OBR leak on Budget morning…
Kids Win
The two-child benefit cap goes. From April 2026, over half a million families see Universal Credit rise by roughly £5,300. The government claims 450,000 children will be lifted out of poverty. Cost: £3 billion.
Sixteen months ago, seven Labour MPs were suspended for voting for exactly this. Now it's policy.
The rape clause for benefits was also wiped out. That's the rule requiring women to prove non-consensual conception to claim benefits for a third child. Reeves called it dehumanising.
Free school meals expand to all children with a parent on Universal Credit. Universal Credit's standard allowance rises over 6%.
Hard to argue with.
Smug Tax: Knee to the Face for EV Owners
Electric Vehicle owners get a new bill: 3p per mile from April 2028 and hybrids pay half. Ten thousand miles a year costs you £300. The subsidy era is ending. But how they track mileage is anyone’s guess. More cameras?
Self-Employed Kicked in the Goolies
Labour still doesn’t see the self-employed and business owners as real workers - so they went in hard. If you run a small company and pay yourself via dividends rather than salary, dividend tax rises to 10.75% at basic rate, 35.75% at higher rate - another turn of the screw and another reason not to be a business owner and provide jobs.
Sneak Attack on Everyone
No income tax rate rises. But thresholds frozen until 2031 - three years longer than expected so as wages rise, thresholds don't, pulling millions slide into higher bands. That’s nearly a million more higher-rate taxpayers by the decade's end with the tax burden at 38% of GDP. It’s the highest since records began.
Will employees request wage freezes in response? Get your calculator out.
The National Living Wage up to £12.71. The 18-20 minimum wage jumps to £10.85.
Employee Share Schemes: Protected
After lobbying from the tech and startup sector, EMI eligibility doubled: companies can now have up to 500 employees (up from 250) and gross assets up to £120 million (up from £30 million). Holding periods stretched from 10 to 15 years.
Labour actually did a thing here for small businesses - the employees rather than the owners.
A Fat Dump on Savers
Salary sacrifice above £2,000 a year loses its NI exemption from 2029. Higher earners and generous employer schemes feel it most. Standard auto-enrolment contributions under £40,000 salary are untouched.
The Cash ISA limit drops from £20,000 to £12,000 from April 2027. The stated aim is to push people into stocks and shares. The risk is less funding for building societies and possibly a tighter mortgage supply.
Mansion Owners Stung
The mansion tax arrives in April 2028 with £2,500 a year on homes over £2m and £7,500 above £5m. This opens the door for other house taxes later.
Landlords face the property income tax rise too, but they will simply increase rental prices for renters. Has this been thought through?
Does it Help Growth?
This morning's headline FT article was: "Business chides Reeves for not kick-starting growth in the Budget."
So that would be a 'no' then. Nuff said.
Meet the Collective
The Executive Summary's Christmas Drinks Event is Next Wednesday.
There are three places left.
Come if you can. Irish music band - found.
