Budget 2025 and Finance (No. 2) Bill 2024-26

What are the latest developments? 

The bill completed Committee stage on 3 February 2026. At Public Bill Committee stage, 21 government amendments were agreed to, all on the nod. A majority of these are consequential or correcting amendments. None of the amendments agreed to attracted significant discussion in committee.

The bill as amended in committee has been published. On 26 February 2026, the Leader of the House, Alan Campbell, has said the remaining stages of the bill are scheduled to take place on 11 March. The amendment paper gives further detail of amendments tabled by the government and opposition parties ahead of the remaining stages.

Library material on the Budget and the Finance Bill

• Library briefing CBP-10405, Autumn Budget 2025: A summary
• Library briefing CBP-10407, Autumn Budget 2025: Reaction
• Library briefing CBP-9687, Fiscal drag: An explainer
• Library briefing CBP-9186, Income tax: freezing the personal allowance and the higher rate threshold
• Library briefing CBP-10181, Changes to agricultural and business property reliefs for inheritance tax
• Library briefing CBP-9765, Alcohol duty: Current policy and developments 
• Library briefing CBP-10440, Budget 2025: Gambling taxation
• Library briefing CBP-10450, Budget 2025: income tax rates on income from property, savings and dividends
• Library briefing CBP-8635, Inheriting pension rights (section 3.6)
• Library briefing CBP-10457, Changes to the UK trade remedies system

Autumn Budget 2025

On 26 November, Chancellor Rachel Reeves presented the 2025 Budget to the House of Commons. Alongside this, the Office for Budget Responsibility (OBR) published its Economic and Fiscal Outlook.

Most of the tax measures announced in the Budget will be legislated for in the Finance (No. 2) Bill 2024-26, currently before the House. Other proposals will be legislated for in a future Finance Bill, while proposals relating to National Insurance contributions (NICs) must be legislated for separately.

What happened following the speech on Budget day?

Following the Chancellor’s speech, the Commons agreed to a resolution under the Provisional Collection of Taxes Act 1968, allowing certain tax changes to take place immediately. The Commons authorised immediate changes to stamp duty reserve tax (SDRT) and to the rates of tobacco duty.

After agreeing these tax changes, the government introduced 101 ways and means resolutions (PDF), which cover the measures that are due to be included in the Finance Bill. This is a procedural step needed before the government can introduce the Finance Bill to the Commons. Although MPs debated the contents of the Budget and the UK’s economic and fiscal outlook, formally the debate took place under the first of the ways and means resolutions, titled “income tax (charge)”.

The Budget debate took place between 26 November and 2 December, at the end of which the House voted on each of the resolutions.

Votes on the Budget resolutions

On 2 December, the House considered each of the resolutions the Chancellor tabled after the Budget. Most of them were agreed to ‘on the nod’, meaning the House did not express dissent and no formal vote occurred. Divisions (where each MP casts an individual vote) occurred on several measures, as outlined below:

The Finance (No. 2) Bill 2024-26

The House formally agreed to all the ways and means resolutions. Following this, the Finance (No. 2) Bill 2024-26 was read a first time, meaning it was formally introduced to Parliament. The text of the bill is available on a dedicated webpage on parliament.uk.

Because the government extended the parliamentary session to spring 2026 this is the second Finance Bill of the 2024-26 session (therefore it is called the ‘Finance (No. 2) Bill’).

More information about the parliamentary passage of the annual Finance Bill can be found in the Library briefing The Budget and the annual Finance Bill.

Second reading of the bill

The bill’s second reading took place on 16 December 2025.

Opening the debate, the Exchequer Secretary to the Treasury, Dan Tomlinson, said the Budget had delivered “fair and necessary” choices, including reductions of £150 off energy bills, increasing the number of NHS appointments, and the elimination of the 2-child benefit limit. The Exchequer Secretary added that the government had to take difficult decisions to ask everyone to contribute “to protect [the] public finances”, including by extending the freeze to income tax thresholds. Mr Tomlinson added this was a fair choice as three quarters of the expected revenue from this policy is expected to come from the wealthiest half of households. He also said the provisions in the bill would ensure assets and wealth were taxed fairly, for example by increasing the rate of income tax on property income, and by reforming inheritance tax reliefs for agricultural and business assets (APR and BPR). The minister concluded by saying the bill was delivering “the government’s commitment to this country to build a stronger and fairer economy […]”

The bill was opposed by most opposition parties in the House. The two measures criticised the most by MPs from opposition parties were the extension of the freeze of personal tax thresholds, and the proposed changes to APR and BPR. Speaking for the Conservatives, Shadow Chancellor Sir Mel Stride criticised several measures included in the Finance Bill, including the two aforementioned ones. The Shadow Chancellor expressed opposition to a Budget which he said prioritised redistribution at the expense of economic growth:

It is a basic fact that if you focus on redistribution […]—of course, there is always an argument for redistribution—at the expense of getting the incentives right in the economy, you will damage growth. That is exactly what is at the heart of this Budget. The key choice that has been taken is to increase taxes on hard-working people and spend at least a substantial proportion of the money raised on increasing the benefits bill.

The reasoned amendment to the Finance Bill, tabled by the Official Opposition, outlines the Opposition’s criticisms of the bill:

This House declines to give a Second Reading to the Finance (No. 2) Bill because the Bill includes provisions breaking the Chancellor of the Exchequer’s promise, given after the Autumn Budget 2024, not to raise taxes, and breaking the Chancellor’s promise at the last Budget that there would be no extension of the freeze in Income Tax and National Insurance thresholds and that, from 2028–29, personal tax thresholds would be uprated in line with inflation once again; because the Bill implements changes to Agricultural Property Relief and Business Property Relief for Inheritance Tax which will devastate family farms, businesses and food security; because the Bill is the result of a Budget that will lead to higher spending and borrowing, while damaging growth and living standards with £26 billion of tax rises; and because this House is opposed to raising taxes on working people to pay for increased welfare spending.

The Liberal Democrats also opposed the bill. Their reasoned amendment (although not selected), read:

That this House, while recognising the deep economic damage caused by the previous Government, declines to give a Second Reading to the Finance (No. 2) Bill because it derives from a Budget which, according to the Office for Budget Responsibility, negatively affects living standards due to higher personal taxes; worsens the cost-of-living crisis by extending the unfair freeze on Income Tax thresholds, which drags millions of low-paid workers into tax; exacerbates the cost-of-doing-business crisis by raising taxes on high street businesses and maintaining the damaging National Insurance increases, which are a tax on jobs, suppressing employment and wages; threatens British farmers, food security and rural communities, as well as family-owned businesses, by cutting Agricultural and Business Property Relief; fails to boost Britain’s high streets by implementing an emergency 5 per cent VAT cut for hospitality, accommodation and attractions until April 2027; and implements no measures to seriously boost economic growth and begin to repair the damage caused by the last Government’s failed Brexit deal, which is costing taxpayers around £90 billion a year in lost tax revenue.

Speaking for the Liberal Democrats during the second reading debate, Treasury spokesperson Daisy Cooper said the bill represented “a series of short-term Treasury grabs, with no care for the consequences and no vision for the future.”

Labour MPs were overwhelmingly more likely to support measures in the Budget. Many other MPs from opposition parties expressed criticism of measures in the bill, particularly the ones on the freeze of income tax thresholds, and on changes to agricultural and business property reliefs for inheritance tax. Two MPs from the Labour backbenches (Alison Hume and Markus Campbell-Savours) also expressed criticism of the government’s proposals on APR and BPR.

Votes at second reading

The House divided on two motions. First, the House divided on the reasoned amendment tabled by the Conservatives, which had been selected for debate. The amendment was defeated (118 ayes to 340 noes). Following, the House divided on whether the bill should receive its second reading. The second reading was agreed to, 341 ayes to 195 noes. Almost all the aye votes came from Labour MPs, as well as 5 independent MPs. No opposition party MP voted alongside Labour on the bill’s second reading, and no Labour MP voted against the bill’s second reading.

Committee of the Whole House

It is common that a number of select clauses of the bill are debated in a Committee of the Whole House, where the entire Chamber sits as a committee that all MPs are part of. This tends to happen for parts of the bill that are more subject to public debate.

Following second reading, the House agreed to a motion committing the following clauses to a committee of the whole house:

• Clauses 1 to 8 and schedules 1 and 2, on the charge of income tax and its rates
• Clauses 9, 10, and 69, on freezing tax allowances
• Clauses 62 and schedule 12, on APR and BPR
• Clauses 63 to 68, on inheritance tax and pensions
• Clauses 83 to 85 and schedule 13, on gambling duties
• Clause 86, on alcohol duty

Committee of the Whole House is taking place over two days. The first day was 12 January and the second 13 January 2026.

Committee of the Whole House proceedings

Committee of the Whole House took place on 12 and 13 January 20266.

In general opposition part criticised the government’s measures as included in the bill, and MPs from the Labour benches supporting the proposals. Many opposition MPs tabled amendments to the clauses selected for debate, and several of which were moved to a division. Opposition Members also attempted to have existing clauses of the bill removed from the Bill.

On 12 January, divisions took place on the following:

• New clause 12 (in the name of the Conservatives) which would have mandated the government to conduct an assessment of the impact of the changes to income tax on property income. The new clause was negatived (167 ayes to 350 noes)
• Clause 10 (as originally drafted by the government) which would extend the freeze to the income tax thresholds to 2030/31. The clause was agreed to and ordered to stand part of the bill (324 ayes to 180 noes)
• Clause 62 (as originally drafted) which would introduce the changes to APR and BPR. The clause was agreed to and ordered to stand part of the bill (344 ayes to 181 noes)
• Amendment 3 (in the name of the Conservatives) which would have removed the transition period of the changes to APR and BPR, and delayed the implementation of the measures to 1 March 2027. The amendment was negatived (185 ayes to 344 noes)
• New clause 7 (in the name of the Liberal Democrats) which would have mandated the government to assess the merits of uprating the APR and BPR relief allowance by the change of the value in agricultural land. The new clause was negatived on division (188 ayes to 341 noes)

The government had also tabled six amendments to increase the value of the APR and BPR allowance from £1 million (as originally set out in the bill) to £2.5 million. These amendments were all agreed to on the nod, without a formal division.

On 13 January, divisions took place on the following:

• Clause 63 (in the bill as originally drafted) which would bring certain pension interests in the scope of inheritance tax from April 2027. The clause was agreed to and ordered to stand part of the bill (348 ayes to 167 noes)
• New clause 24 (in the name of the Conservatives) which would have mandated the government to publish detailed guidance on the implementation of the policy introducing inheritance tax on certain pension interests within six months of the passage of the Finance Bill. The new clause was negatived (184 ayes to 331 noes)
• New clause 25 (in the name of the Conservatives) which would have mandated the government to make a statement to the House within six months of the passage of the Finance Bill on the effects of the changes to gambling duties. The new clause was negatived (187 ayes to 351 noes)
• Clause 86 (in the bill as originally drafted) which would uprate the rates of alcohol duty in line with RPI inflation. The clause was agreed to and ordered to stand part of the bill (344 ayes to 173 noes)
• New clause 9 (in the name of the Liberal Democrats) which would have required the government to report on the effects of the alcohol duty increases on the hospitality sector. The new clause was negatived (181 ayes to 335 noes).
• New clause 26 (in the name of the Conservatives) would have mandated the government to make a statement to the House within six months of the passage of the Finance Bill on the effects of the changes to alcohol duties. The new clause was negatived (172 ayes to 334 noes).

Public Bill Committee

The rest of the bill was debated in Public Bill Committee, which took place between 27 January and 3 February 2026.

The government moved 21 amendments to different provisions of the bill. Mostly these amendments were minor, consequential, or corrections. None of the government amendments attracted significant opposition and they were all agreed to without a division.

The Official Opposition moved seven amendments and four new clauses to a vote, whereas the Liberal Democrats moved three amendments to a vote. These proposed changes related to several different aspects of the bill, spanning from income tax relief on venture capital trusts to payments under the infected blood compensation scheme, as well as several new clauses mandating reviews of the impact of different aspects of the bill. On division, all of these amendments and new clauses were negatived (PDF).

Report and remaining stages

On 26 February 2026, the Leader of the House, Alan Campbell, has said the remaining stages of the bill are scheduled to take place on 11 March.

The Treasury Committee

The Treasury Select Committee held oral evidence sessions to scrutinise the Autumn Budget on 2, 3, and 10 December 2025. The sessions had the following witnesses:

• 2 December 2025: Professor David Miles and Tom Josephs (members of the Budget Responsibility Committee)
• 3 December 2025: Professor Tera Allas CBE (Chair of Advisory Committee at The Productivity Institute; Helen Miller (Director at Institute for Fiscal Studies), Ruth Curtice (Chief Executive at the Resolution Foundation), Dr Peder Beck-Friis (Economist at PIMCO)
• 10 December 2025: Rachel Reeves (Chancellor of the Exchequer), James Bowler (Permanent Secretary at HM Treasury), and Dharmesh Nayee (Director of Strategy, Planning and Budget at HM Treasury)

Appendix 1: Budget measures included in the Finance Bill

Following the Budget, HM Revenue and Customs (HMRC) published the overview of tax legislation and rates (OOTLAR). Chapter 1 of the OOTLAR sets out the measures that are included in the Finance Bill.

Some of the measures included in this Finance Bill had already been announced before the Budget. For example, the proposals to limit the amount of full inheritance tax relief for estates containing agricultural or business property were first announced at the 2024 Autumn Budget.

Appendix 2: Budget measures not for inclusion in the Finance Bill

Chapter 2 of HMRC’s OOTLAR sets out the Budget measures that are not included in the Finance Bill currently before the House.

This includes the government’s proposals to set a cap on employer National Insurance contributions (NICs) relief on pension contributions above £2,000 per year made via salary sacrifice schemes.

The Finance Bill can only raise money to be spent for the functioning of the entirety of government. Money raised through National Insurance contributions (NICs) is sent to a specific fund (the National Insurance Fund), and money from the National Insurance Fund can only be spent for specific purposes (primarily contributory benefits, such as the State Pension).

Therefore, legislation altering NICs cannot be included in the Finance Bill and will be legislated separately. The government introduced the National Insurance Contributions (Employer Pension Contributions) Bill 2024-26 to provide for the government’s proposals to cap NICs relief on employer contributions to salary sacrifice schemes. The second reading of the Bill took place on 17 December. The Library briefing National Insurance Contributions (Employer Pension Contributions) Bill 2024-26 has more information on this policy.

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