Key Highlights

Investing in growth

The government will invest £2bn in the construction of 18,000 new social and affordable homes in 2026/27. The money will enable housing associations and local councils to immediately bring forward bids for new developments across England.

The Chancellor also announced a £625m package of measures to address widespread skills shortages in construction, an essential part of the government’s plan to build 1.5m homes in England and progress vital infrastructure projects.

Transforming public services and supporting people into work

Rachel Reeves announced a £3.25bn transformation fund to support public services reform, seize the opportunities presented by artificial intelligence and revolutionise frontline delivery of essential services.

At the same time, government back-office functions will have their administrative budgets reduced by 15% by the end of the decade to prioritise frontline services.

Reforming welfare to get Britain working

Cuts designed to save £4.8bn a year on the welfare bill by 2030 were announced on 18 March. These include stricter tests for personal independence payments (PIPs), affecting hundreds of thousands of claimants, and a freeze on incapacity benefits.

The Health Element of Universal Credit will be frozen for existing claimants until 2029/30. It’ll be reduced to £50 a week for new claimants in 2026/27 and then frozen until 2029/30.

Meanwhile, the Universal Credit Standard Allowance for new and existing claims will increase above inflation from April 2026. The standard allowance weekly rate for a single person aged 25 or over will increase from £92 in 2025/26 to £106 in 2029/30.

The government also intends to crack down on welfare fraud and errors by increasing preventative checks and recruiting over 500 new fraud staff. Total savings from these measures are estimated to be £240m by 2029/30.

Closing the tax gap

£87m investment over the next five years in HMRC’s existing partnerships with private sector debt collection agencies to collect more unpaid tax debts. £114m to recruit an additional 600 HMRC debt management staff. £100m to recruit an additional 500 HMRC compliance staff.

The government will expand the rollout of Making Tax Digital (MTD) for income tax Self Assessment to sole traders and landlords with incomes over £20,000 from April 2028. Increasing late payment penalties for VAT taxpayers and income tax Self Assessment taxpayers as they join MTD, from April 2025 onwards. The new rates will be 3% of the tax outstanding where tax is overdue by 15 days, plus 3% where tax is overdue by 30 days, plus 10% per annum where tax is overdue by 31 days or more.

HMRC will re-start “direct recovery” of tax debts owed by individuals and companies who have the ability to pay but choose not to do so. The government will also explore options to automate the process for collecting lower value tax debts.

As announced at the Budget last autumn, the government is publishing consultations on:

• Modernising how HMRC acquires and uses third-party data to make it easier for taxpayers to get tax right first time.
• Options to simplify and strengthen HMRC’s inaccuracy and failure to notify penalties.
• Options to enhance HMRC’s powers and sanctions to take swifter and stronger action against tax advisers who facilitate non-compliance.
• A package of measures to close in on promoters of marketed tax avoidance.

Other pre-announced and technical measures

From 1 October 2026, new residential developments in England (with certain exemptions) will incur the Building Safety Levy to raise revenue to be spent on building safety. Previously developed land also benefits from a 50% reduced rate to help ensure these sites remain viable.

From summer 2025, employed individuals liable to the High-Income Child Benefit Charge (HICBC) will be able to report their family’s Child Benefit payments through a new digital service and opt to pay HICBC directly through PAYE, without the need to register for Self Assessment.

The government is publishing a consultation on widening the use of advance clearances in R&D tax credits to help reduce error and fraud, provide certainty to businesses, and improve the customer experience.

Following business applications, the government is temporarily exempting numerous goods from tariff duty to avoid unnecessary costs for UK businesses. This measure will suspend tariffs on goods including plywood and a range of food stuffs until June 2027.