The measures have been revealed in a forecast by the Office for Budget Responsibility (OBR), which was released in error ahead of the chancellor’s statement.
Politics Live: Budget measures leaked
The freeze, that was due to end in 2028, will be extended for another three years, despite Ms Reeves previously saying she would not do this as it would “hurt working people”.
The move will drag nearly two million more taxpayers into a higher tax band, raising an estimated £8bn for the exchequer in 2029-2030, the OBR report said.
The chancellor will announce a series of smaller tax rises too, including a “mansion tax” on properties worth over £2m, while salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from national insurance.
Meanwhile the two-child benefit cap will be scrapped – a move likely to please Labour MPs and one that will contribute to the bulk of an £11bn increase in public spending.
Ms Reeves hit out at the “deeply disappointing” OBR leak as she stood up in the Commons to deliver her statement, calling it “a serious error on their part”.
The fiscal watchdog has apologised for what it called a “technical error”, but it comes after a chaotic lead up to the budget which has been rife with leaks and speculation.
According to the OBR, this budget will bring the UK’s tax take to an all-time high of 38% of GDP in 2030-31.
Ms Reeves said this was to “cut NHS waiting lists, cut the cost of living and cut the debt and borrowing”.
Facing down her critics she said: “No doubt, we will face opposition again.
“But I have yet to see a credible, or a fairer alternative plan for working people. These are my choices – the right choices for a fairer, a stronger, and a more secure Britain.”
The “mansion tax” will raise £0.4bn in 2029-30, while charging national insurance on salary-sacrificed pension contributions is estimated to raise 4.7bn.
Other measures in the budget include:
• The 5p cut in fuel duty will remain in place until September 2026, when it will be reversed through a staggered approach;
• There will be a new mileage tax for electric vehicles from April 2028;
•The cash ISA limit will be slashed by £8,000 – except for over-65s
•£13bn of funding for seven mayors to invest in skills, business support and infrastructure.
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