On 26^th November 2025 the UK Chancellor presented her much-anticipated second Budget. Her speech was prefaced by a stern dressing down by the Deputy Speaker about the discourtesy shown to the House of the way in which Rachel Reeves has courted the press in recent months. And courted it she has, with rumours rife in the run up to the day itself.

It was to this backdrop that the unthinkable happened – a ‘technical error’ meant that the OBR released their Economic and Fiscal Outlook just before midday – 30 minutes before the Chancellor was due to start her speech. Not the most auspicious of starts!

So, what were the key takeaways from the speech itself and did it live up to the rumours?

Rumour: Increase in main rate of income tax and extension to freeze on income tax thresholds

Fact: Already quashed the previous week, the main rate of income tax for earners was not increased. However, the basic, higher and additional tax rates will all go up by 2% on savings and rental income from April 2027; and the basic and higher tax rates (but not the additional rate) will increase by 2% on dividend income from April 2026.

The increase in the tax rate on dividends will no doubt require fresh thought for business owners trying to manage their tax affairs in a tax efficient manner.

Although expected, the extended freezing of thresholds was confirmed and will last until at least 2031 dragging considerably more individuals into higher rates of tax.

Rumour: National Insurance to be introduced on property income

Fact: Whilst the Chancellor stopped short of introducing National Insurance on property income, the 2% increase in tax on landlords from April 2027 creates a new, separate tax rate for property income; and given the penal treatment of landlords by successive governments in recent years, it will be interesting to see the extent to which this rate is tinkered with in the future.

Rumour: Increase in Capital Gains Tax (CGT) rate

Fact: The main rate of CGT has not been increased, but the relief available for business owners selling their company to an Employee Ownership Trust has been slashed from 100% to 50% with immediate effect, equating to a maximum tax rate of 12%. Business Asset Disposal Relief remained intact, but the rate will still increase to 18% from April 2026.

Rumour: Changes to Inheritance Tax (IHT), including restriction to lifetime giving

Fact: After so much bad news on IHT in the 2024 Budget, this year’s speech had a notable absence of announcements, and no restrictions were introduced to lifetime giving. The one welcome change, however, was the announcement that the £1 million ‘BPR/APR’ allowance can be transferred to a surviving spouse or civil partner from 6 April 2026.

Rumour: Introduction of a Mansion Tax

Fact: Introduced as the High Value Council Tax Surcharge (HVCTS), properties with a value of more than £2m in 2026, as identified by the Valuation Office, will be subject to an annual charge from April 2028. Payable by the owner rather than the occupier, the government has announced a consultation on a ‘full set of reliefs and exemptions’ but the detail is yet to be seen.  The rate will start at £2,500 for properties with a value of £2m – £2.5m, with three further bands and a top rate of £7,500 for properties with a value of more than £5m.

Rumour: Changes to pensions including loss of the 25% tax-free lump sum, abolition of capping of higher rate income tax relief or introducing a cap on pension salary-sacrifice savings

Fact: Of these rumours, only the pension salary-sacrifice cap didn’t end up on the cutting floor. From April 2029, any salary in excess of £2,000 which has been sacrificed by an employee in favour of pension contributions will be subject to employer’s and employee’s NI. Although, plenty could change by April 2029 of course!

And what were the other takeaways?

• Electric car drivers will be subject to a 3p charge for every mile they drive from April 2028. Plug-in hybrid vehicles will be charged 1.5p per-mile.
• The two-child benefit cap will be scrapped from April 2026.
• Savers under the age of 65 will be limited to £12,000 p.a. in a cash ISA but can still save up to £20,000 provided the balance is in stocks and shares.
• The government is set to scrap co-investment payments by small and medium-sized employers for apprentices under the age of 25.
• From next April, the national living wage will rise by 4.1% to £12.71 an hour for eligible workers aged 21 and over.
• There will be a stamp duty reserve tax exemption for companies listing on the UK stock exchange for the first three years of listing; and a proposed modernisation of stamp duty on shares and stamp duty reserve tax to create a newly named Securities Transfer Charge.
• The main rate of corporation tax remains at 25%.
• Business rates will be reduced for 750,000 retail, hospitality and leisure properties, funded by an increase on premises worth more than £500,000.
• The main writing down allowance on capital expenditure will reduce from 18% to 14% from April 2026, but a new 40% first-year allowance will be introduced from January 2026 which is expected to be available to all businesses.

In Reeves’ 2024 Budget speech just over a year ago she said ‘I am keeping every single promise on tax that I made in our manifesto. So there will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government.’ In her 2025 speech Reeves concluded by stating that Labour had kept ‘every single one’ of their manifesto commitments despite having announced a three year extension to the freeze in thresholds. Which is it to be?

There is a quote in Chess that “One doesn’t have to play well, it’s enough to play better than your opponent.” As a former chess champion, perhaps the Chancellor is simply banking on playing better than the previous government rather than playing to the letter of her manifesto rules. The game still has some years to be played before we will know for sure whether her strategy has paid off.