Chancellor Rachel Reeves has unveiled a budget seen as breaking her no-tax-hike pledge, while reaffirming plans to raise defense spending
The UK government has announced £26 billion ($34.4 billion) in tax hikes that will see record tax levels for much of the population, while reaffirming its intention to ramp up military spending.
Chancellor Rachel Reeves unveiled a new budget on Wednesday that freezes income tax and National Insurance thresholds until 2031, meaning wage rises will push around 1.7 million people into higher tax brackets.
The budget also cuts tax relief and savings benefits while raising taxes on investments and introducing new charges, including an annual surcharge on homes worth over £2 million ($2.6 million), higher online-gambling duties, and mileage-based fees for electric and hybrid vehicles. Altogether, the measures amount to £26 billion in tax rises for 2029-30, bringing the UK’s tax take to a record 38% of national income by 2030-31, according to the Office for Budget Responsibility.
Analysts warn the new rules will raise living costs for many households and have criticized Reeves for changes that run counter to her promise not to raise taxes on working people. Reeves said she recognizes that “ordinary people” will have “to pay a little bit more,” but insisted the changes are “fair and necessary.”
Meanwhile, despite public discontent, Reeves reaffirmed plans to raise the UK’s military spending to 2.6% of GDP during her budget address.
“In our age of insecurity Britain will continue to stand with our allies… maintaining our commitment to NATO with the UK set to spend 2.6% of GDP on defense by April 2027,” she stated.
The UK first announced the increase in June, amid a NATO-wide militarization drive over what the bloc described as a threat from Russia – claims Moscow has repeatedly dismissed as “nonsense.” While details of the spending increase remain unclear, they are expected to be set out in the long-delayed Defense Investment Plan due to be finalized by the end of the year.
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Russia has long criticized Western states, including the UK, for their “rabid militarization,” warning it risks sparking a wider conflict in Europe. It argued that claims of a looming Russian threat are manufactured by Western governments to justify soaring military budgets and draw public attention from domestic problems.
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