London Daily

Focus on the big picture.
Thursday, Mar 05, 2026

Budget means tax rises ahead – and little new for first-time buyers

Budget means tax rises ahead – and little new for first-time buyers

Analysis: Freezing allowances will lead to more people paying income tax, while the stamp duty holiday is driving up house prices
We can hardly call them “stealth tax rises” this time around, as the chancellor was at pains to spell out the impact of his decision to freeze both personal allowances and the amount you can put in your pension over your working life. But for many people the increases outlined in the budget may remain under the radar for a while.

Personal allowances will rise as planned in April. The first £12,750 of income will still be tax-free, while the 40% rate will kick in at £50,270. But after that there will be no change until 2026. Any inflation-linked increase in pay or benefits will therefore be eroded by the extra tax you will pay.

On pensions, it is only those with the biggest pots that will rub against the limit, which will be just over £1m.

Freezing income tax thresholds does not mean taking home less, but more people move into paying tax, or pay the higher rate – so much so that Treasury expects to make £19bn from this move over four years.

By 2026, the OBR reckons 1.3 million more people could become taxpayers and another 1 million could be pushed in to the 40% bracket.

The upside is that this has all been put off by at least a year, and if things go better than expected a future budget might even see plans change.

But family budgets already need to stretch further. Unmentioned in the budget, but coming down the track, are big rises in council tax, with some local authorities planning to increase bills by the maximum 4.99% they are allowed.

Energy bills have started to tick upwards, and other services are also getting more expensive. If inflation takes off, the chill of those freezes will be felt.

As is often the case with Tory budgets, the housing market played an important part in Sunak’s speech with confirmation of the heavily trailed return of 95% mortgages, and an extension of the stamp duty holiday. It was all good news for those who can afford to buy or are almost there, but is unlikely to be enough to turn “generation rent” into “generation buy” as billed.

The stamp duty threshold will remain at £500,000 until the end of June, which means it is likely that the scramble for bigger homes could continue throughout the spring. After that it will drop to £250,000 until the end of September – and we can expect an autumn of calls for it to stay that way, rather than reverting to the previous level of £125,000.

So far the stamp duty holiday has driven up prices, creating almost as many problems for would-be buyers as the withdrawal of 95% mortgages. With the announcement of a government guarantee to get large loans going again, Sunak will help some thwarted buyers.

But as well as pulling those large loans since the crisis hit, lenders have also spent the last year fiddling with criteria and more closely scrutinising the would-be borrowers who come through their doors. Some have limited the loans they will give to the self-employed, others have ruled out mortgages for those on furlough. Until the country is on a more even keel generally, it seems likely many people will still be locked out of large loans.

And Sunak’s fixes are all at the demand side: there is nothing new to stimulate supply. That 5% buyers need to save as a deposit will keep getting bigger as long as prices go up, so homebuying will still remain outside the grasp of many.
Newsletter

Related Articles

0:00
0:00
Close
Iran Conflict Strains U.S.–U.K. Alliance as Trump and Starmer Clash Over Military Strategy
UK Interest Rates Could Rise Above Four Percent Again if Energy Shock Continues, Think Tank Warns
Starmer Defends Britain’s Iran Strategy as Badenoch Urges Stronger Military Support
Labour MP Says She Saw No Sign Husband Broke Law After Arrest in China Espionage Investigation
UK Jobless Rate Overtakes Italy’s for First Time in Years as Labour Market Weakens
United Kingdom Suspends Student Visas for Four Countries in Unprecedented Immigration Move
Campaigners Warn UK Student Visa Ban Could Push Migrants Toward Dangerous Channel Crossings
First U.K. Charter Flight for Stranded Nationals Set to Depart Oman Amid Middle East Crisis
France and United Kingdom Deploy Warships to Eastern Mediterranean as Middle East Conflict Escalates
U.K. Arrests Three Men Including Lawmaker’s Partner in Suspected China Espionage Investigation
Trump Says UK–US ‘Special Relationship’ Is Diminished Amid Middle East Dispute
UK Economic Forecasts Face Fresh Strain from Middle East Conflict and Rising Energy Costs
UK Reaffirms Close US Ties After Trump’s Public Criticism
Reeves Stresses Stability and Fiscal Discipline in UK Budget Update as Growth Outlook Shifts
UK Deploys Royal Navy Destroyer HMS Dragon to Cyprus After Drone Strike on RAF Base
Green Party Surges Past Labour in New UK Poll as Traditional Party Support Crumbles
Majority of Britons Oppose U.S. Use of UK Military Bases in Iran Conflict
UK Intensifies Evacuation Efforts from Oman, Working with Airlines to Boost Flight Capacity
Trump Condemns UK and Spain in Unusually Sharp Rift Over Iran Military Action
Trump Repeats UK Claims That Diverge from Verified Facts Amid Diplomatic Strain
UK Arrests Prominent Figures Linked to Epstein Network as Questions Mount Over US Action
Trump Says UK ‘Took Far Too Long’ to Approve Use of Airbases for Iran Strikes
Scope of Britain’s Role in the Expanding Middle East Conflict Comes Under Scrutiny
Trump Says He Is ‘Very Disappointed’ in Starmer Over Iran Comments
U.S. Embassy in Riyadh Struck by Drones Amid Escalating Iran Conflict
Starmer Confronts Strategic Test After Drone Strike Near British Base in Cyprus
Rolls-Royce Chief Signals Openness to Germany Joining UK-Led Fighter Jet Programme
UK Stocks Slip as Escalating Iran Conflict Triggers Global Market Selloff
UK Overhauls Asylum System to Make Refugee Status Temporary
Starmer Warns of ‘Reckless’ Iranian Strikes Amid Escalating Regional Tensions
British Base in Cyprus Targeted as Drones Intercepted Amid Expanding Iran Conflict
Starmer Diverges from Trump on Iran Strategy, Rejects ‘Regime Change from the Skies’
U.S. and Israel Intensify Strikes on Iran as Conflict Expands to Lebanon and Gulf States
Violent Pro-Iranian Protesters Storm U.S. Consulate in Karachi
Missile Debris Sparks Fires at Dubai’s Jebel Ali Port Near Palm Jumeirah
Iran Strikes U.S. Fifth Fleet Headquarters in Bahrain Amid Wider Gulf Retaliation
When the State Replaces the Parent: How Gender Policy Is Redefining Custody and Coercion
Bill Clinton Denies Knowing Woman in Hot Tub Photo During Closed-Door Epstein Deposition
Former U.S. President Bill Clinton Testifies on Ties to Jeffrey Epstein Before Congressional Oversight Committee
Dyson Reaches Settlement in Landmark UK Forced Labour Case
Barclays and Jefferies Shares Fall After UK Mortgage Lender Collapse Rekindles Credit Market Concerns
Play Exploring Donald Trump’s Rise to Power by ‘Lehman Trilogy’ Author to Premiere in the UK
Man Arrested After Churchill Statue Defaced in Central London
Keir Starmer Faces Political Setback as Labour Finishes Third in High-Profile By-Election
UK Assisted Dying Bill Set to Fall Short in Parliament as Regional Initiatives Gain Ground
UK Defence Ministry Clarifies Position After Reports of Imminent Helicopter Contract
Independent Left-Wing Plumber Secures Shock Victory as Greens Surge in UK By-Election
Reform UK Refers Alleged ‘Family Voting’ Incidents in By-Election to Police
United Kingdom Temporarily Withdraws Embassy Staff from Iran Amid Heightened Regional Tensions
UK Government Reaches Framework Agreement on Release of Mandelson Vetting Files
×