Use our calculator below to see how better or worse off after the Spring Statement after Rachel Reeves announced public spending cuts and major cuts to benefit payments
Rachel Reeves has delivered her Spring Statement where she announced public spending cuts and major cuts to benefit payments to help balance gloomy economic forecasts. The Chancellor has pledged to only hold one major fiscal event each year – which meant no major tax changes today.
However, millions more people will still end up paying more to the taxman as the tax thresholds remain frozen until 2028. The huge changes to benefit payments will also mean more than three million families to be hit by welfare cuts by 2030, according to the Government’s own analysis.
It comes as the 2025 growth estimate for the UK has been halved from 2% to 1% by the official forecaster, the Office for Budget Responsibility. You can use our calculator below to see how better or worse off after the Spring Statement. Let us know what you think about the Spring Statement by emailing webnews@mirror.com.
What it means for taxpayers
Tax thresholds remain frozen until 2028 after no changes were announced in the Spring Statement today. The Chancellor has committed to one major fiscal event a year and had promised there would be no tax changes in her Spring Statement. But frozen thresholds mean millions of workers will still pay more tax when they get a pay rise, or start a new job with higher pay, as they’ll be pushed into higher tax brackets.
This process is known as fiscal drag, as it generates more tax for the Treasury without having to actually change the rate of tax that is being paid. Tax thresholds previously rose in line with inflation but were frozen by the previous Conservative government in 2021. They have remained at their current level ever since.
There is the personal allowance, which is the amount we can earn without paying any Income Tax. This is currently set at £12,570 a year. On taxable earnings above this amount, you pay the 20% basic rate of Income Tax. There is a higher rate of 40% which is paid on earnings above £50,270, while anything above £125,140 is taxed at the 45% additional rate.
Once you start to earn more than £100,000 each year, you lose 50p of your tax-free personal allowance for every £1 you earn above this amount. By the time your income reaches £125,140, your personal allowance has been wiped out. You are taxed based on the portion of your income where that tax bracket starts.
What it means if you claim benefits
The biggest changes in the Spring Statement were to disability benefits and welfare payments, including the eligibility criteria for PIP being tightened from November 2026. PIP comes in two parts – the daily living part and mobility part. You need between eight and 11 points to get the standard rate of the daily living part of PIP, and 12 points or more for the higher rate.
But from November 2026, you would need a minimum of four points in at least one activity to get the daily living part of PIP. There will be no change to the eligibility criteria for the mobility part of PIP. Universal Credit is also changing. The standard allowance for a single person aged 25 or over rise from £92 a week in 2025/26 to £106 a week by 2029/30.
But the health element will be almost halved for new claimants from April 2026, reducing it from £97 a week in 2024/25 to £50 a week in 2026/27, and then frozen at this level until 2029/30. Those with the most severe, life-long health conditions will see their incomes protected through an additional premium.
For those already claiming the Universal Credit health element, the rate will be frozen at the current rate of £97 a week until 2029/30. There are also plans to scrap the Work Capability Assessment – which is used to determine if someone claiming Universal Credit is fit to work – and replace it with the PIP assessment.
What it means for your savings
There had been rumours that the Chancellor was considering changes to cash ISAs. You can save up to £20,000 each tax year into a cash ISA and any interest you make is tax-free. But reports earlier this year suggested that the Chancellor was contemplating cutting this limit to £4,000 as part of wider plans to get people investing in the stock market instead.
However, the Government has confirmed that it is still looking at potential options to reform ISAs in the future. A section in the Spring Statement documents reads: “The government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission. Alongside this, the government is working closely with the Financial Conduct Authority to deliver a system of targeted support to give people the confidence to invest.”
As there were no changes announced today, it means you can continue to save up to £20,000 each tax year into a cash ISA. If any changes were to be announced in the future, it would unlikely impact any savings you’ve already depositing into an ISA – only future savings. The personal savings allowance – which is how much you can make in savings interest before you’re taxed – has also been left untouched.
The personal savings allowance is £1,000 every tax year for basic-rate taxpayers and £500 for higher-rate taxpayers, while additional rate taxpayers don’t get an allowance at all. You would start to pay interest on the money earned from your savings once you earn above these thresholds.
What it means for first-time buyers
The Chancellor failed to announce an extension of the current stamp duty holiday – meaning first-time buyers and home movers face paying thousands of pounds more in tax when they purchase a property from next week. Stamp duty thresholds were raised in 2020 and will drop to their previous levels from April 1.
If you’re a first-time buyer in England and Wales, you currently pay stamp duty if the property you’re buying is worth over £425,000 – but this will go back down to £300,000 next week. First-time buyers currently only benefit from reduced stamp duty rates if they buy a property worth £625,000 or less. This will reduce to £500,000.
If you’re moving home, you currently have to pay stamp duty if the property you’re buying is your only home and is worth over £250,000. This will go down to its previous level of £125,000. The Government has promised to build 1.5 million new homes this Parliament and the Chancellor today claimed Labour was on course to reach this target.
What it means for your pension
There were no major changes for pensions announced in the Spring Statement today. The state pension is due to rise by 4.1% from April and this will go ahead as planned. State pensions rise every year in line with the triple lock promise, which sets the increase at whichever is highest out of inflation (using the previous September inflation figure), wages (average growth between May and July) or 2.5%.
However, there is an ongoing Pensions Review which is focused more on how to increase investment and boost returns for savers in the pensions system. This would apply to workplace and private pensions, as opposed to the state pension. But this review has been indefinitely delayed, according to reports earlier this year.
What it means for smokers and drinkers
The price of alcohol and cigarettes will not be going up again as there are no changes announced to the duties charged to them. Alcohol rates on non-draught drinks rose in line with the Retail Price Index (RPI) figure as of February this year – but draught duty on alcoholic drinks below 8.5% was cut by 1.7%, which the Chancellor said would see “a penny off a pint” in the pub.
In October, the Chancellor announced she would renew the tobacco duty escalator at Retail Price Index (RPI) plus 2% for the remainder of parliament. There was also a one-off increase in duty for hand-rolling tobacco by 10%, to 12% above RPI inflation.
