Labour’s tax hikes will cost British families over £1,000 per year on average

Tax Hikes That Are Crunching British Wallets

Policy Engine’s latest crunch shows how the government’s fresh tax haul is packing a serious punch on everyday households across the UK.

Employer National Insurance (NI) – going from 13.8% to 15%, with a lower starting point. Average cost: £818 per year.
Capital Gains Tax – basic‑rate folks hit 18% instead of 10%. Adds about £150 to the household bill.
Council Tax – up 5%, topping up the expenses by £96.
Stamp Duty – the nil‑rate band for first‑timers drops from £425k to £300k; for regular buyers it falls from £250k to £125k. That’s an average hit of £48.

Where it’s hit hardest

London feels the brunt most, with median families paying an extra £718—followed by the West Midlands at £637. The East Midlands takes the lightest blow at £422, still a meaningful dent.

The big picture

Government’s new tax package raises a crisp £26.95 bn for the Treasury.
Employer NI alone accounts for £22.9 bn—the lion’s share.
There’s more on the horizon: starting 1 April, Vehicle Excise Duty (VED) changes mean most new petrol/diesel cars will pay double first‑year road tax, and electric vehicles will, for the first time, also pay a tax.

Thoughts from the hot‑seat

Tom Clougherty (IEA) says:

“The rise in April will squeeze household budgets and slow growth. The NI hike is a slap for businesses after a big corporation tax bump, and with higher wages and stricter labour rules, workers shoulder most of it. Stamp Duty is a real bummer—lower thresholds pull more buyers into the tax net, stalling the housing market that’s already teetering. We need a simpler, more rational system; for now, the pinch continues.”

Nikhil Woodruff (Policy Engine) adds:

“Our simulations predict households will see a net income drop of about £1,112 in 2025‑26, with 74% of that from NI. We see how impact varies by income and region.”