Autumn Budget: Chancellor announces taxes to be raised by £40bn and compensation for Post Office victims

Key Points

Rachel Reeves is delivering the Labour Party’s first Budget in almost 15 years
She announced taxes will rise by £40bn in a bid to plug a ‘black hole in public finances’
Victims of the Horizon and infected blood scandals will be compensated under two new funds
Reeves will also crack down on on unpaid taxes to raise £6.5bn
The chancellor unveiled a National Living Wage increase of 6.7% to £12.21 an hour
Flat rate duty on vapes for the first time from 2026

Taxes will be raised by £40bn in the UK in a bid to plug a “black hole in public finances” left by the previous Tory government, the chancellor has announced.

On Wednesday, Rachel Reeves delivered the Labour government’s first Budget since coming into power in July – the first for the party in almost 15 years.

The chancellor said a “black hole in public finances” inherited from the previous Conservative government meant “action” needed to be taken.

She told the Commons: “Any chancellor standing here today would face this reality, and any responsible chancellor would take action. That is why today, I am restoring stability to our public finances and rebuilding our public services.”

Reeves also vowed to crack down on unpaid taxes to raise £6.5bn by the end of the forecast period.

“Before a government considers any change to a tax rate or threshold, it must ensure that people pay what they already owe,” she told the Commons.

Meanwhile the Government will set aside £11.8bn to compensate those affected by the infected blood scandal and £1.8bn to compensate victims of the Post Office Horizon scandal, the chancellor announced.

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Vapes will be subject to a flat rate duty for the first time from 2026 and confirmed the National Living Wage will rise by 6.7% to £12.21 an hour.

Reeves reiterated the Government’s commitment to the pension triple lock, telling the Commons: “This commitment means that while working-age benefits will be uprated in line with CPI at 1.7%, the basic and new state pension will be uprated by 4.1% in 2025-26.

“This means that over 12 million pensioners will gain up to £470 next year.”

She added: “The pension credit standard minimum guarantee will also rise by 4.1% from around £11,400 per year to around £11,850 for a single pensioner.”

The chancellor added it would be the “wrong choice” to increase fuel duty next year, saying she would continue the freeze and maintain the temporary 5p cut for another year.