The budget is out, and it bites. It's the biggest tax hike in a generation and will do little to stop the current exodus of Britons. That is because Chancellor Rachel Reeves, who oversees the nation's finances, has moved beyond targeting the wealthy to punishing the middle class.
The Englishman's home is his castle and now that castle is under siege. Around 1.3 million middle-class households could now see an increase in what they pay each year on homes they already own. From April 2028, owners of properties identified as being valued at over £2 million will be liable for an annual charge, in addition to council tax liabilities. That charge will fall into specified bands, depending on the price of the home at purchase. Charges will increase in line with inflation each year from 2029-2030 onwards.
Ms Reeves’s “mansion tax” will hit professional, middle-class families, mostly in London and England's South-East. Critically, the new levies could be catastrophic for retirees, the elderly and other homeowners who are asset-rich but cash-poor.
For avoidance of doubt, it’s the professionals, supposedly some of the working people Labour promised to spare in its election manifesto, that Ms Reeves is now going after: the lawyers and the doctors and the engineers. She claims it’s because she has a £22 billion budget hole to fill, but I doubt most hardworking Brits will buy it.
The truth is, having backtracked on plans to raise income tax and refused to reform welfare and scale back benefits, the Chancellor’s remaining options are few. Clearly, detonating the last working engine of the British economy – property – is a small price to pay to keep the Labour party backbenchers in line.
All this yo-yoing has left markets skittish and the Office of Budget Responsibility (OBR) jumping the gun; its leak of Labour's budget before it could be properly announced by the Chancellor is just the latest test of nerves. Gilts already rose 10 basis points after Ms Reeves squashed plans for an income tax hike.
For context, Britain’s mid-income workers pay less income tax than any other nation in the G7. In fact, those making around £37,480, the median full-time salary in the UK in 2024, are paying the lowest percentage of income and payroll taxes since 1990. And while the top 1 per cent of Britons now shoulder 29 per cent of the income tax burden, the departure of the nation’s top earners – and the Chancellor’s own backtracking on raising the income tax for everyone – means the government will struggle to fill in the gap. Translation: it’s mission-critical that mid-income and low-income earners begin to pay more income tax, particularly now with millions more people than ever before making demands on the welfare system. Yet the government just couldn't get there.
Simply put, the Labour government lacks leadership, the confidence of the British public and, above all, the political will to tackle the country’s problems. The government's approval rating sits at just 14 per cent, and economists are warning that politics is driving economics rather than the other way around. This week’s budget may not end in tears, but bond markets will be looking for more than just a commitment to fiscal discipline and a credible plan to achieve it. They will also be looking for signs that the government is planning to make significant spending cuts. But that’s tough to achieve when Ms Reeves cannot even say out loud that benefits must be cut, unskilled migration must stop and net-zero policies must be reversed.
Critics charge that putting British homeowners squarely in the crosshairs is tantamount to a class war against middle England. And, make no mistake; in targeting them, the Labour government is simply adding to a growing list of Britons who will see emigrating as their best and only option. A recent Ipsos poll commissioned by The National supports that narrative: only 51 per cent of those surveyed said they would live in the UK given the current economic conditions, while eight in 10 people say it’s the UAE that offers career opportunities and the prospect of long-term stability and growth.
Recently revised immigration statistics now put the number of Brits who made good their escape in 2024 at 257,000. That’s a 234 per cent increase on the numbers initially put out by the Office for National Statistics. And while these Brits may not all have moved abroad to places with friendlier tax policies, it’s safe to say that a large proportion have done so. The legendary British prime minister Winston Churchill famously said, “When you’re going through hell, keep going” – but for how long can Britain’s middle class keep up the fight?
