Chancellor Reeves Unveils Record-Breaking Tax Rise in Budget
Chancellor Rachel Reeves has introduced a record-breaking £40 billion tax increase in her first Budget, sparking both praise and concern. The OBR warns this could stifle long-term economic growth, but the government maintains it's necessary to address public finance shortfalls and fund critical sectors like healthcare.
The biggest change is a 1.2 percentage point hike in National Insurance contributions (NICs) for employers, raising £25 billion. This has been met with apprehension from business leaders who fear it will add to the financial strain on companies.
The Budget also includes an increase in Capital Gains Tax (CGT), raising concerns about its impact on Britain's tech and AI sectors. For small businesses, the rise in NICs could be a significant challenge.
However, the Budget also includes positive news for small businesses, with the Employment Allowance increase easing the NIC burden for companies with smaller payrolls. The freeze on inheritance tax thresholds has also been extended until 2030, drawing mixed reactions.
Ms Reeves defended the tax hikes, claiming they were necessary to address "black holes" in public finances and to fund long-overdue compensation for victims of the Post Office Horizon and infected blood scandals.
While Reeves's Budget aims to shore up public finances and fund critical sectors like healthcare, many business leaders worry the measures could hamper the UK's growth ambitions. The long-term impact on investment, hiring, and overall economic stability remains uncertain. The £40 billion tax increase underscores the government's commitment to balancing the books, but critics argue it risks undermining Britain's competitive edge and discouraging the private sector investment needed to drive sustained growth.