Martin Lewis has publicly analyzed the recent Autumn Budget presented by Chancellor Rachel Reeves, highlighting concerns regarding its impact on household finances. The Budget, which includes a series of tax increases totaling £26 billion, aims to address a significant £20 billion gap in the country’s public finances.
Reeves’s decision to freeze tax thresholds starting in the fiscal year 2028/29 is expected to pull approximately one in four workers into the highest tax bracket, raising an estimated £8 billion by 2029-30. Notably, this freeze means that an additional 780,000 individuals will begin paying income tax for the first time.
During an appearance on the BBC’s Martin Lewis Podcast, the founder of Money Saving Expert characterized the tax freeze as a “stealth tax.” He explained, “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.” Lewis emphasized that while individuals may see an increase in their take-home pay due to rising incomes, their spending power would diminish as a result of these tax changes.
Despite his criticisms, Lewis acknowledged some positive aspects of the Budget. He reported having “three wins” from his discussions with Treasury officials prior to the Budget’s release. Among these was a welcome reduction in energy levies, which he noted would lead to an average £150 decrease in household energy bills.
“The government is reallocating some of the levies and policy costs I’ve been advocating against into general taxation,” he stated. Lewis further explained that this move would result in a reduction of around 3.4 pence per kilowatt-hour for electricity and 0.3 pence for gas, effectively providing significant savings for consumers. He added, “The big question is ‘will this apply to fixed tariffs?’ I have been assured that the government intends for energy companies to pass these savings directly to consumers.”
Lewis also addressed the reduction in the cash ISA limit, which will drop from £20,000 to £12,000 for individuals under 65. He viewed this adjustment as less detrimental than it could have been, stating, “I would have preferred a carrot not stick approach. The £12,000 limit is still reasonable for many, aiming to encourage youth investment rather than mere saving.”
The Money Saving Expert founder expressed satisfaction with the exemption for those over 65, asserting that this targeted approach makes sense. “When I met the Chancellor a few weeks ago, I pointed out that a blanket cut to the limit would be counterproductive,” he remarked. “The carve-out for over 65s is a sensible decision, and I’m pleased she listened.”
Lewis stressed the importance of complementing these financial changes with improved investment education and better access to guidance for young people. He believes that enhanced incentives for investment are crucial to fostering a financially literate younger generation.
In a separate critique, Lewis commented on the Office for Budget Responsibility’s (OBR) premature release of its economic forecasts prior to the Budget announcement. He described this incident as “staggering,” suggesting that it could lead to frustration within the government ranks.
As the implications of Reeves’s Budget unfold, the public will be closely monitoring how these changes affect their financial situations in the coming years.
