(qlmbusinessnews.com . Thu 27th Nov, 2025) London, UK —
How the New UK Budget Affects You: Income Tax, Electric Vehicle Fees, and More
Chancellor Rachel Reeves Reveals Major Budget Changes with Extended Tax Threshold Freezes
In a recent announcement that caught public attention due to an early leak by the official forecaster, Chancellor Rachel Reeves laid out the new Budget, setting a course that affects taxpayers, drivers, homeowners, and savers across the UK.
Notable Tax Changes and How They’ll Impact Your Finances
The Chancellor has opted to keep the tax threshold bands frozen until 2031, extending the freeze by three additional years. This decision has a notable impact on taxpayers, as any salary increase could potentially push individuals into a higher tax bracket, thereby increasing the tax portion of their earnings significantly.
In detail, the income tax levels for England, Wales, and Northern Ireland remain as follows: a personal allowance of up to £12,570 taxed at 0%, a basic rate for earnings from £12,571 to £50,270 taxed at 20%, a higher rate for earnings from £50,271 to £125,140 taxed at 40%, and an additional rate for earnings over £125,140 taxed at 45%. Scotland, however, maintains its own set of rates and bands.
Electric Vehicle Users to Face Road Charges
From 2028, those driving electric vehicles (EVs) and hybrids will encounter new road usage charges. EV operators will be billed 3p per mile, whereas plug-in hybrid drivers will see a charge of 1.5p per mile, with these rates subject to annual adjustments for inflation.
Boosts for Minimum Wage Workers
April will see a positive adjustment for workers on the minimum wage. Adults aged 21 and above on the National Living Wage will see an increase to £12.71 per hour. Meanwhile, younger workers and apprentices also receive wage hikes in line with the government's commitment to raising living standards.
Increased Council Tax for High-Value Properties
A significant move dubbed a ‘mansion tax' will see properties valued at over £2 million incurring additional council tax charges from April 2028. This decision is set to affect approximately 100,000 properties, predominantly located in London and the southeast, demanding reassessment of properties for the first time since 1991.
Energy Bill Adjustments and Rail Fare Freeze
In measures aiming to cut living costs, certain levies on energy bills will be eliminated, foreseeing an average reduction of £150 annually for millions. Meanwhile, regulated rail fares in England will see a freeze until March 2027, marking the first halt in fare increases in three decades.
Changes to Savings and Estate Planning
A pivot in savings strategy will reduce the tax-free allowance in cash ISAs to £12,000 for individuals under 65, encouraging investments in potentially more lucrative, though riskier, avenues. In real estate, landlords may face increased taxes, expected to ripple down, affecting rents.
Uplifts in Benefits and Support for Larger Families
In a move towards more inclusive support, the two-child cap on universal credit or tax credits will be abolished from April next year, allowing families with more than two children to receive increased benefits.
Conclusion
Chancellor Reeves's budget announcement heralds significant shifts across taxation, savings, and benefits, aiming to navigate through economic challenges while focusing on growth and support for the populace. The detailed effects of these changes remain to be closely watched, as individuals and businesses across the UK adjust to the new fiscal landscape.
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