Families across the UK are being told to brace for a tax hammer blow (Image: AP)

       Rachel Reeves is facing a political nightmare as hard-working families across the UK are being told to brace for a tax hammer blow starting in April 2025. A new study has indicated that British households will pay an additional ￡1,112 on average in taxes due to the government’s sweeping reforms, which are set to raise nearly ￡27 billion for the Treasury. Families already struggling with rising living costs will feel the impact of higher National Insurance, Council Tax, Capital Gains Tax, and Stamp Duty, with some regions bearing the brunt of the increases.

       The analysis, conducted by Policy Engine for the Institute of Economic Affairs, shows that the increases will disproportionately affect the South East, West Midlands, and East of England. The hike in National Insurance alone will cost households an average of ￡818 per year.

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       Basic rate taxpayers will also see a near-doubling of Capital Gains Tax, adding an average ￡150 to their tax bill, says the IEA.

       Council Tax will rise by 5%, costing families an extra ￡96, while Stamp Duty changes, which lower the thresholds for first-time buyers, will add ￡48 on average.

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       Tom Clougherty, the IEA's Executive Director, warned that the tax increases would undermine economic growth.

       He said: "The tax increases coming into force in April will weigh on household budgets and undermine economic growth."

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       The employers' national insurance hike is a slap in the face for business, coming hot on the heels of a big corporation tax increase, and alongside an increased minimum wage and more onerous employment rules."

       Mr Clougherty added that the higher taxes would ultimately affect workers most, leading to "lower wages and fewer opportunities."

       Chancellor Ms Reeves defended the Government’s position in her Spring Statement, claiming: "We understand the pressures families are facing, but these reforms are vital for long-term economic stability.

       "We need to make these tough choices now to secure our financial future and support public services."

       Prime Minister Sir Keir Starmer (Image: Getty)

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       However, critics argue that the tax hikes will hit the lowest-income households the hardest, exacerbating the strain on already stretched budgets.

       The regional effects of these tax increases are stark. According to the study, median households in London will pay an extra ￡718, while those in the West Midlands will face a ￡637 increase.

       In contrast, households in the East Midlands will see the lowest increase at ￡422. Despite these disparities, the study makes clear that no region will be immune from the tax hikes.

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       These changes come after years of fiscal drag, where income tax thresholds have remained frozen, pushing more people into higher tax bands. The total ￡26.95 billion raised by the reforms will have a significant impact on households, with National Insurance accounting for ￡22.9 billion of that sum.

       In a fresh blow for Ms Reeves, a YouGov poll released today showed seven in 10 Britons (70%) believe the government have managed the economy badly since they came to power, compared to just 19% who feel they have been successful in their handling of the matter.