Martin Lewis, founder of Money Saving Expert, has voiced strong concerns regarding the recent Autumn Budget presented by Chancellor Rachel Reeves. He described the decision to freeze income tax thresholds as a “stealth tax” that would ultimately leave many earners worse off. Reeves unveiled a series of tax increases totaling £26 billion on Wednesday, aiming to address a significant £20 billion shortfall in the country’s public finances.
The budget’s strategy includes freezing tax thresholds from the fiscal year 2028/29, a move projected to generate £8 billion in revenue by 2029-30. This policy could push one in four workers into the highest tax band, with an additional 780,000 individuals set to begin paying income tax for the first time. Lewis emphasized the implications of these changes during an appearance on the BBC’s Martin Lewis Podcast, stating, “You will be worse off. Freezing tax thresholds means that in real terms, people are actually paying a higher proportion of their income as tax.”
In addition to his criticism, Lewis acknowledged some positive aspects of the budget, particularly the adjustments to energy levies. He noted that households could see an average reduction of £150 in their energy bills due to the government’s decision to shift certain levies into general taxation. He explained that this change would lower the unit rate of electricity by approximately 3.4 pence and gas by 0.3 pence per kilowatt-hour.
“The big question is, will this apply to fixed tariffs?” Lewis remarked, adding that he had been informed that the government intends for energy companies to pass on these savings to consumers directly.
Changes to the cash Individual Savings Account (ISA) limits also drew Lewis’s attention. The limit will decrease from £20,000 to £12,000 for individuals under 65. While he expressed a preference for a more encouraging approach to savings, he conceded that the new limit remains reasonable for many. Lewis highlighted that the aim of the reduction is not to raise revenue but to motivate younger individuals to invest rather than simply save.
“I pointed out to the Chancellor that a blanket cut to the limit would be perverse,” he said. “So the carve out for over 65s makes total sense, and I’m pleased she listened.” He further called for improved investment education and more accessible guidance for young individuals.
In a critical note, Lewis addressed the accidental premature release of the Office for Budget Responsibility’s (OBR) economic forecast prior to the budget announcement. He commented, “This looks like staggering fat fingers from the OBR publishing budget outcomes before the budget; the government will be fuming.”
As the implications of Reeves’s budget unfold, both the government and the public will need to navigate the potential financial impact of these policy changes. Lewis’s insights provide a valuable perspective on the evolving fiscal landscape in the UK.
