The Chancellor has announced that the Government plans to raise £40bn from a raft of newly confirmed tax changes.

Delivering the first Budget under a Labour Government for 14 years, Rachel Reeves confirmed an extended freeze on inheritance tax (IHT), an increase to capital gains tax (CGT), a significant jump for employers’ national insurance contributions, and also said she would abolish the non-dom tax regime.

Reeves began by telling MPs gathered in the House of Commons that Labour had inherited “broken public finances and broken public services” from the previous Conservative Government, which had created a “£22bn black hole”.

She set out numerous predictions for CPI inflation for the next five years, which according to the Office for Budget Responsibility (OBR), will average 2.5% this year, 2.6% in 2025, then 2.3% in 2026, 2.1% in 2027, 2.1% in 2028 and 2.0%, the Bank of England’s target, in 2029.

Reeves, who spoke for over an hour and 20 minutes, then confirmed a flurry of fiscal changes to make up the £40bn figure, the largest of which would be from a forecast £25bn from an increase to national insurance contributions for employers, which will rise by 1.2% to 15% from April 2025.

The threshold at which businesses start paying national insurance on a workers’ earnings will be lowered, from £9,100 to £5,000.

For IHT, where rates had been frozen until 2028, the Chancellor confirmed an extension to the freeze by a further two years until 2030. This means the first £325,000 of any estate would still be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants and £1m when a tax-free allowance is passed to a surviving spouse or civil partner.

Reeves also said she would close what she described a “loophole” created by the previous Government when the lifetime allowance was abolished, by bringing inherited pensions into IHT from April 2027. She said the IHT changes would raise over £2bn by the end of the forecast period.

For CGT, Reeves confirmed an increase to the lower rate from 10% to 18%, and to the higher rate from 20% to 24%. The rates on residential property will remain at 18% and 24%.

Reeves also announced an increase to the stamp duty land surcharge for second homes, by 2% to 5%, which will come in from tomorrow.

Despite rumours beforehand, Reeves’ Budget did not include an extension to the freeze on income tax and national insurance thresholds beyond 2028, in a move she said would “avoid hurting working people”.

Elsewhere, the Budget also included a freeze on fuel duty, an increase to air passenger duty, a cut to alcohol duty, as well as the introduction of a new vaping duty.

The Chancellor also confirmed plans to abolish the non-dom tax regime and remove the “outdated concept” of domicile from the tax system from April next year. She instead said the Government would introduce a new, residence-based scheme with “internationally competitive arrangements” for those coming to the UK on a temporary basis.

---