Martin Lewis explains what Rachel Reeves' 'rabbit out of hat was' in Budget

Martin Lewis has explained what the "rabbit out of the hat" was in the Labour Party Budget today. The BBC Sounds podcast host and ITV regular gave his expert commentary and advice over Twitter, now X, as Chancellor Rachel Reeves delivered her Budget.

"So the rabbit out of the hat was 'not extending the freeze on tax & NI thresholds' beyond what was planned to 2028. An extension of that would've only been on paper anyway, as it could always be changed, increased or reversed at future budgets #Budget," Mr Lewis said.

Corporation tax will be capped at 25% for the duration of this Parliament, Ms Reeves also said. The Chancellor told the Commons: "Alongside the changes I am making today, I am publishing a Corporate Tax Roadmap, providing the business certainty called for by the CBI, British Chambers of Commerce and the Institute for Directors.

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"This confirms our commitment to cap the rate of corporation tax at 25% - the lowest in the G7 - for the duration of this Parliament, while maintaining full expensing and the £1 million Annual Investment Allowance and keeping the current rates for research and development reliefs, to drive innovation."

During the Budget, ms Reeves mocked Rishi Sunak as she joked his “ears have pricked up” when she mentioned air passenger duty. The Chancellor told the Commons: “Air passenger duty has not kept up with inflation in recent years so we are introducing an adjustment, meaning an increase of no more than £2 for an economy class short-haul flight.

“But I am taking a different approach when it comes to private jets, increasing the rate of air passenger duty by a further 50%. That is equivalent to £450 per passenger for a private jet to, say, California?” And Ms Reeves has announced a “flat rate duty” on vaping liquid from October 2026.