Budget 2025: Chancellor announces tax reforms

Evening Standard

Transcript

00:00The Conservatives knew that our tax system didn't work. Time and time again

00:04they ducked the necessary reforms, leaving a system unfit for a changing

00:09economy, with unfairness that they refused to address. Currently a landlord

00:16with an income of £25,000 will pay nearly £1,200 less in tax than their

00:23tenants with the same salary, because no national insurance is charged on

00:28property, dividend or savings income. It's not fair that the tax system treats

00:34different types of income so differently, and so I will increase the basic and

00:40higher rate of tax on property, savings and dividend income by two percentage

00:45points, and the additional rate of tax on property and savings income by two

00:50percentage points. Even after these reforms, 90% of taxpayers will still

00:58pay no tax at all on their savings. As well as narrowing the gap between the tax

01:04on income from assets and income from work, I also believe that a fair society is one

01:10where the wealthiest pay their fair share. The reforms I made last year will raise an

01:16additional £8 billion a year by 2020, 30 from wealth. I increased taxes last year on

01:23private equity, private schools and private jets. I abolished the non-dom tax regime,

01:29and this year I will make two changes to cap trust charges and prevent avoidance. I

01:36reformed inheritance tax on agricultural and business assets, and this year I am

01:45aligning those reforms with wider inheritance tax rules by allowing the

01:49transfer of the 100% relief allowance between spouses, balancing the taxation of

01:54these valuable assets with the realities of family life. In this budget, I will take

02:01further steps to deal with a long-standing source of wealth inequality in our

02:05country. A Band-D home in Darlington or Blackpool pays just under £2,400 in council tax, nearly

02:15300 pounds more than a £10 million mansion in Mayfair. And so, from 2028, I am introducing

02:27the High Value Council Tax Surcharge in England, an annual £2,500 charge for properties worth

02:35more than £2 million, rising to £7,500 for properties worth more than £5 million. This

02:44will be collected alongside council tax, levied on owners, and we will consult on options for

02:50support or deferral. This new surcharge will raise over £400 million by 2031 and will be

02:58charged on less than the top 1% of properties.

03:03Madam Deputy Speaker, reliefs in our tax system cost the taxpayer billions of pounds a year,

03:10but many of them no longer serve their original purpose. The Government rightly provides generous

03:17tax relief for people paying into a pension, relieving income tax on all contributions and

03:23on the investment itself, as well as national insurance relief on employer contributions,

03:29at a cost of over £70 billion a year to the exchequer. This Budget makes no changes to those

03:37reliefs or to the tax-free lump sum. But salary sacrifice for pensions, which was intended to

03:44be a small part of our pension system, is forecast to almost treble in cost to other taxpayers from £2.8

03:51billion in 2017 to £8 billion by 2030, with the greatest benefit going to the highest earners or to

04:00those in the financial services sector putting their bonuses into pensions tax-free, while those on

04:07the minimum wage or those whose employers do not offer salary sacrifice do not benefit at all. That is

04:13not sustainable for our public finances, putting pressure on the tax that everyone else pays.

04:19And so I am introducing a £2,000 cap on salary sacrifice into a pension, with contributions above that

04:26taxed in the same way as other employee pension contributions. That is a pragmatic step so that

04:34people, especially on low and middle incomes, can continue to use salary sacrifice for their pension

04:40without paying any more in tax than they do now. And to give individuals and employers time to adjust

04:46to these new arrangements, these changes will come into effect in 2029.

05:05Thank you so much.

05:12Yes.

Category

Transcript

Be the first to comment

Recommended