Nine ways the Budget could affect you if you’re under 25

The Chancellor has announced his Budget which includes a cap on the income tax cap, a rise in the minimum wage and a so-called milkshake tax.

If you’re 25 or younger, here are nine ways Chancellor Rachel Reeves’ budget may affect you.

The minimum wage will increase from April and youth aged 18 to 20 will get the highest increase.

Their hourly rate will rise by 85p to £10.85, while under-18s and apprentices will rise by 45p to £8 an hour. Those over 21 will get a 50p per hour rise to £12.71.

Reeves said these increases would benefit 2.7 million people.

Broadly speaking, the government is trying to bring the minimum wage for youth aged 18 to 20 in line with that of workers aged 21 and above.

But businesses have warned the increases could push up prices and put a halt to hiring.

Think tank the Resolution Foundation said the “unnecessarily large” increase for people under 21 could make it particularly hard for 18 to 20-year-olds to find work.

The Chancellor has set a deadline for repaying student loans from 2027-28.

The limit is currently £28,470 for borrowers in England or Wales since September 2012.

This means that each year, workers earning above that amount will be forced to pay more on their student loans if the limit increases in line with inflation.

Student loan repayments are typically 9% of their income each month over a certain limit.

Reeves also unveiled a new international student levy, which will see universities charge £925 per overseas student per year from August 2028, with an exemption for up to 220 students per year.

The income raised from the levy will be used to fund maintenance grants for disadvantaged students studying so-called priority courses such as university degrees and technical qualifications.

The Chancellor appealed to renters in his Budget speech, saying it was unfair that work income is taxed more than landlords’ income.

Reeves plans to raise the tax rate on income from properties by 2%.

But the official forecaster at the Office for Budget Responsibility (OBR) warned that the changes risked leading to “persistent long-term increases in rents”.

This is because landlords may leave the private rental market, limiting supply and increasing prices for renters.

The Chancellor set aside £1.5 billion over the next five years to help 16 to 24-year-olds into work or training.

Reeves said £820 million would go towards his guarantee to offer paid work placements to young people who have been out of work, education or training for 18 months.

It is part of a campaign by the government to reduce the number of people out of work, with those who refuse to take up the offer facing the risk of having their benefits taken away.

An additional £725 million will be spent on making training for apprentices under 25 free for small and medium-sized firms.

The Chancellor’s decision to end tax breaks on small parcels could make some online shopping costlier from 2029.

The “de minimis” loophole allows foreign retailers to send goods worth up to £135 to the UK without incurring customs duty.

British retailers have been highly critical of the loophole, arguing that it undermines high street firms, and wanted changes to be introduced sooner.

This means brands like Shein and Teemu that benefit from this loophole are likely to see their prices rise once it closes.

If you have a pre-made latte or protein shake with your lunch on the way back from the gym, you could be hit by the so-called milkshake tax.

Pre-packaged milkshakes and coffee with high sugar content will face additional tax from 2028.

The limit for imposition of sugar levy will be reduced from 5 grams to 4.5 grams of sugar per 100 ml.

The change, part of an effort to combat childhood obesity, could mean additional taxes on popular products like Yazoo, Mullers Frieze and Starbucks Café Latte, as well as branded “high protein” drinks like YouFit and Shaken Udder.

Reeves promised to deliver a “new, simple” way to help first-time buyers get on the property ladder.

There will be a consultation in early 2026 on what a replacement for Lifetime Isa (Lisa) could be.

Anyone under the age of 40 can open a LISA to save for retirement or buy a first home. Savers can invest up to £4,000 a year and the government will top it up by 25%.

Frequent complaints about Lisa include that savers face penalties for withdrawing money early, meaning they could lose 6.25% of their savings.

Critics have also called for the £450,000 limit for properties that can be purchased using LISA to be raised, which is unchanged from 2017.

The retirement aspect of Lisa may also be removed in favor of focusing only on first-time buyers in consulting.

If you use train or bus to commute, then the good news is that the fare will not increase at the moment.

For the first time in three decades, the Chancellor announced that regulated rail fares in England will remain fixed until March 2027.

Normally fares, which include season tickets for most passenger routes, are increased in line with inflation plus 1%. The most recent increase, in March 2025, was 4.6%.

A bus fare cap of £3 for a single journey covering most bus journeys in England is already in place until March 2027.