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The chancellor has unveiled her latest Budget, which introduces a freeze on income tax thresholds alongside a rise in minimum wages and the introduction of a new sugar-related charge known as the “milkshake tax.” These measures are crafted to influence different segments of the population, particularly those aged 25 and under.
One notable change involves increases in minimum wage rates set to take effect from April. Young workers aged 18 to 20 will receive the largest increase, with their hourly pay rising by 85p to £10.85. Meanwhile, those under 18 and apprentices will benefit from a 45p increase, reaching £8 per hour, and workers over 21 will gain an additional 50p, moving to £12.71 an hour. The chancellor stated that some 2.7 million individuals stand to gain from these adjustments. However, some businesses have expressed concern that the wage hikes could result in higher costs and a slowdown in hiring. The Resolution Foundation think tank warned that the significant rise for younger workers might actually make employment harder to secure for those aged 18 to 20.
Student loan repayment thresholds have also been frozen, affecting those with loans taken out since September 2012 in England and Wales. The repayment cutoff remains at £28,470 from 2027-28, meaning that incomes above this level will trigger larger repayments. Typically, repayments amount to 9% of the borrower’s income above the threshold. Additionally, an international student levy will be introduced in August 2028, charging universities £925 per overseas student annually, though up to 220 students will be exempt each year. The levy revenue will fund maintenance grants for disadvantaged students pursuing key courses, including university degrees and technical qualifications.
Private renters face potential challenges following plans to raise the tax on income from rental properties by 2%. The chancellor argued that it is unfair for earnings from work to be taxed more heavily than income from rentals. Still, the Office for Budget Responsibility warned that this could reduce the number of landlords and restrict housing supply, leading to a long-term increase in rents. In contrast, the government has pledged £1.5 billion over five years to support young people aged 16 to 24 in finding employment or training. Part of this funding—£820 million—will be allocated to paid work placements for those out of education or work for over 18 months, backed by a benefit sanction policy for those who refuse these opportunities. Another £725 million will make training apprentices under 25 free for small and medium businesses.
Other Budget highlights impacting young people include the scrapping of a tax loophole for small parcels from abroad, which could make certain online shopping more costly starting in 2029. This change targets overseas retailers who currently send goods valued under £135 without customs duty, a practice criticized by British retailers. Meanwhile, pre-packaged sugary drinks such as milkshakes and iced coffees with sugar content above 4.5g per 100ml will face a new sugar tax from 2028, a reduction in the previous threshold to encourage healthier choices and combat childhood obesity. This could add costs to popular products including Yazoo, Muller’s Frijj, and Starbucks Caffe Latte.
In terms of housing, the chancellor has promised a “new, simpler” scheme to assist first-time buyers. A consultation is planned for early 2026 on a potential replacement for the Lifetime ISA (LISA), which currently allows savers under 40 to put aside up to £4,000 yearly with a 25% government bonus aimed at retirement or home purchase. Critics have pointed to penalties for early withdrawal and the lack of an increase to the £450,000 property price threshold since 2017. The consultation might also focus LISA solely on helping first-time buyers by removing its retirement savings function.
Finally, transport users will see relief as regulated rail fares in England will be frozen until March 2027, marking the first time in thirty years there will be no increase. This freeze applies to season tickets and standard fares, which typically rise in line with inflation plus 1%. Separately, bus fares remain capped at £3 for single journeys across most of England through the same period
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