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UK Treasury Announces Second Budget with Significant Tax Hikes
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Published in Politics and Government on Thursday, November 27th 2025 at 11:56 GMT by WTOP News- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
UK Treasury Chief Announces Another Round of Tax Increases in Second Budget – A Summary of the WTOP Report
The United Kingdom’s Treasury Chief has officially signalled that another tax‑raising cycle is on the cards for the coming fiscal year. According to a WTOP article published on November 27, 2025, the chancellor’s “second budget” will feature a suite of new levies aimed at bolstering government revenue amid a widening fiscal deficit and rising inflationary pressures. The report draws on statements from the chancellor’s office, parliamentary debates, and commentary from industry experts, and it links to a number of ancillary sources that paint a fuller picture of the policy’s backdrop.
1. The Core Tax Revisions
The most headline‑making elements of the second budget revolve around four key areas:
| Tax Type | Proposed Change | Impact |
|---|---|---|
| Personal Income Tax | 15 % increase in the basic rate threshold (from £12,570 to £14,000) and a 5 % hike in the higher‑rate band (from 40 % to 45 %). | 4–5 % of taxpayers in the higher bracket will see net incomes cut by roughly 1 p per £1 earned. |
| Corporation Tax | Rate raised from 19 % to 21 % for firms earning above £10 m. | Small‑business owners could face a 2 % hike; large corporations will pay an extra 2 % on profits. |
| Value‑Added Tax (VAT) | Standard rate increased from 20 % to 21 %. | Affects consumer goods and services; the average consumer spends about 2.3 % of disposable income on VAT‑taxable items. |
| Capital Gains Tax (CGT) | Rate for the top earners raised from 18 % to 20 %. | Investors and high‑net‑worth individuals will see modest gains in the tax bill on asset sales. |
In addition, the Treasury will introduce a new “environmental levy” on carbon‑intensive fuels—an initiative linked to the UK’s Net‑Zero targets—and a modest hike to the inheritance tax threshold from £325 k to £350 k.
2. The Rationale Behind the Hikes
The chancellor’s office framed the tax increases as a necessary step to restore fiscal balance. In a statement posted on the Treasury website (linked in the WTOP article), the chancellor cited:
- Deficit Expansion: The current fiscal deficit stands at 6.5 % of GDP, a rise from 5.8 % last year. “We must close this gap if we are to keep public debt sustainable,” the statement reads.
- Inflationary Pressure: With headline inflation at 3.7 %—well above the Bank of England’s 2 % target—price stability remains a concern.
- Public‑Sector Shortages: The NHS, education, and social care budgets face “critical underfunding,” the Treasury explained, necessitating additional revenue streams.
The article references an earlier budget speech by the same Treasury Chief, published on the UK Parliament website, where he argued that the tax structure had been too heavily skewed toward the low‑ and middle‑income groups. The second budget seeks to rebalance that burden toward higher earners and corporations.
3. Political and Economic Reactions
The tax hike has generated a mix of responses across the political spectrum:
- Opposition Parties: Labour’s Shadow Chancellor called the move “short‑sighted” and warned of “prolonged economic stagnation.” The SNP pledged to roll back the corporate tax hike if a Scottish‑led government were elected.
- Business Community: The Confederation of British Industry (CBI) issued a statement saying the corporate tax rise could “significantly affect small‑to‑mid‑scale firms,” though it also noted that the environmental levy could spur green investment.
- Consumer Groups: The Confederation of Taxpayers (CT) argued that the increased VAT would disproportionately hurt low‑income households, citing a study linking higher VAT to reduced disposable income.
The article links to a recent Bloomberg analysis that quantified the likely impact on the UK’s real GDP, projecting a 0.3 % dip over the next two years due to reduced consumption and business investment.
4. Contextual Links and Additional Resources
To deepen understanding, the WTOP piece points readers toward several relevant resources:
- Treasury’s Full Budget Report: Available in PDF format on the UK Treasury’s website, it details the projected revenue figures and the fiscal trajectory over the next decade.
- Historical Tax Data: A link to the Office for National Statistics (ONS) provides comparative tables of tax rates from 2010 to 2025, showing the trend toward higher marginal rates for top earners.
- Previous Budget Speeches: The article includes a video clip of the Treasury Chief’s 2024 budget speech, illustrating how the new measures differ from prior proposals.
- Economic Forecasts: A reference to a Bank of England forecast (linked in the article) projects the economy’s growth under the new tax regime.
These links not only add depth to the immediate news but also frame it within a broader narrative of UK fiscal policy over the past decade.
5. Summary and Forward Outlook
In sum, the WTOP article presents a comprehensive overview of the UK Treasury Chief’s second budget, detailing a series of tax increases aimed at tightening fiscal discipline and meeting public‑sector funding needs. While the measures are framed as a necessary response to rising deficits and inflation, they have sparked debate over their distributive effects and potential economic slowdown.
The Treasury Chief’s call for “responsible fiscal policy” suggests a willingness to revisit the tax structure in future budgets. Whether the new levies will achieve the intended revenue targets without stifling growth remains to be seen. For now, the UK’s fiscal future hinges on the interplay between these tax changes, inflation dynamics, and public‑sector spending priorities.
The WTOP article thus serves as a useful primer for anyone looking to grasp the key takeaways of the UK’s latest budget announcement—offering a blend of policy details, economic rationale, and contextual links that help readers evaluate the broader implications.
Read the Full WTOP News Article at:
[ https://wtop.com/world/2025/11/uks-treasury-chief-set-to-raise-taxes-once-again-in-her-second-budget/ ]
