• The chancellor of the exchequer, Rachel Reeves, set out the UK government’s budget to the House of Commons on Wednesday.
• The statement contained measures related to taxation, spending, and investment.
• The Office for Budget Responsibility (OBR) also published its five-year forecasts for the economy and public finances.

The chancellor of the exchequer, Rachel Reeves, delivered the government’s budget statement to the House of Commons on Wednesday.

Mrs Reeves first updated members of parliament on the Office for Budget Responsibility’s (OBR) latest forecasts for the British economy. She highlighted that UK Gross Domestic Product (GDP) growth in 2025 has outperformed the OBR’s March forecast, with GDP per capita rising by 1% since Q2 2024. However, productivity growth remains subdued, with expectations dampened by past economic shocks, including Brexit and Covid-19. As a result, the OBR has lowered its forecast for productivity growth.

Real GDP is now forecast to grow by 1.5% on average over the forecast period, which is 0.3 percentage points slower than projected in March 2025. Wage growth and inflation are expected to be higher than projected in March by around 0.75% and 0.5%, respectively. This means that total growth in nominal GDP over the forecast period is only around 1% lower than projected in March. CPI inflation is expected to reach the Bank of England’s 2% target in 2027, a year later than projected in March. The government’s fiscal mandate is projected to be in balance by 2029-30 with a margin of £22bn – £12bn more than in the March forecast.

Mrs Reeves then outlined short and long-term fiscal policies aimed at stability, investment, and price control. She also confirmed that while the OBR will continue to produce two reports per year, fiscal rules will now be assessed only once annually.

Key Measures

1. Business & Competitiveness

Business Rates: RHL multipliers will be permanently lowered to 5p below national equivalents, making the small business RHL multiplier 38.2p and the standard RHLmultiplier 43p from 2026-27. To fund this sustainably, a higher rate will apply to large commercial properties with rateable values over £500,000. The high-value multiplier will be 50.8p in 2026-27, 2.8p above the national standard multiplier. To ease the transition, the government will provide a £4.3bn support package over three years, including:

• A £3.2bn Transitional Relief scheme for the largest ratepayers, including airports and hospitality.
• A Supporting Small Business scheme to help the smallest businesses worth over £500 million.
• A £1.3bn expansion of the Supporting Small Business scheme to businesses who were eligible for RHL relief, protecting independent pubs and shops as they transition to permanently lower tax rates.

Enterprise Management Incentives (EMI): Eligibility expanded to scale-ups from April 2026.

Industrial Competitiveness Scheme: Electricity costs reduced by £35–40/MWh from 2027.

UK Listing Relief: Stamp Duty Reserve Tax relief for transfers of securities for three years from listing, effective November 2025.

VCT/EIS Schemes: Income Tax relief reduced from April 2026, but annual and lifetime investment limits increased and gross assets test from 6 April 2026 for both the VCT and EIS.

Customs Duty: The government will remove relief for low-value imports (goods valued at £135 or less) by March 2029 at the latest. These imports will then be charged customs duty in line with bulk goods, with new import arrangements and declaration processes introduced to manage the change.

Licensing: Authorities asked to promote growth and deliver economic benefits and set this out under a new National Licensing Policy Framework.

2. Other Tax & Fiscal Measures

General Tax Changes:

• Income tax and NIC thresholds frozen until April 2031.
• NICs tax relief for salary sacrifice into pensions capped at £2,000 per employee from 2029.
• Plan 2 student loan repayment thresholds maintained at 2026/27 levels for three years from April 2027.
• Capital Gains Tax rate for Business Asset Disposal Relief and Investors’ Relief will increase to match the main lower rate at 18% from April 2026.
• Remote Gaming Duty increased to 40% from April 2026.A new Remote Betting Rate introduced at 25% within General Betting Duty from April 2027
• Bingo Duty abolished from April 2026.

VAT relief: Introduced for business donations of goods to charity for onward distribution or use in the delivery of their service from April 2026.

3. Workforce & Skill

National Living Wage: Increased from £12.21 per hour in April 2025 to £12.71 per hour from April 2026 for workers aged 21 and over.

Apprenticeships: Fully funded SME apprenticeships for under-25s, alongside reforms to simplify the system and introduce short courses from April 2026, including:

• Removing the additional uplift to levy accounts.
• Changing the expiry window to 12 months.
• Changing the government’s co-investment rate to 75% for levy-paying. employers once they have exhausted all their funds.
• Working with employers to streamline the suite of apprenticeship standards available.