The 12 key UK Budget announcements for Scotland and what they mean

Ms Reeves, the first ever female Chancellor, set out her plans to “restore stability to our economy”, “begin a decade of economic renewal” and “deliver change” Labour promised during the general election campaign.

Ms Reeves announced more than £3 billion of extra funding for the Scottish Government, increases to National Insurance contributions for employers as well as a hike to whisky duty - but will freeze fuel duty and introduce a private jet tax.

READ MORE: Chancellor Rachel Reeves unveils Labour budget and what it means for Scotland

She also hit out at her predecessors, accusing the Tories of having “hid the reality of their public spending plans” and branded their actions “the height of irresponsibility”.

Funding boost for SNP ministers

The Chancellor told MPs that the Scottish Government will benefit from an extra £3.4bn in Barnett consequentials.

The Scottish Government will be provided with a £47.7bn settlement in 2025-26, with Ms Reeves branding it the “largest real-terms funding settlement since devolution”.

She said that the extra funding should be “used effectively in Scotland to deliver the public services that the people of Scotland deserve”.

The UK government has also pledged nearly £890m of direct investment into freeports, investment zones and the Argyll and Bute growth deal, which will also be funded by Holyrood.

Public spending to increase in real terms

Ms Reeves said day-to-day spending on public services will grow by 1.5 per cent in real terms while capital spending will increase by 1.7 per cent in real terms.

Making the announcement, the Chancellor said Labour was signalling the end to austerity.

Some of the spending plans announced will only count south of the Border - with Barnett consequentials totalling £4.3bn set to flow to the Scottish Government to spend on devolved policy areas.

The Chancellor announced a 19 per cent increase in education funding, including £1.4bn to rebuild schools in England. The UK government will also spend £5bn on housing, including the supply of affordable housing south of the Border.

The NHS in England will receive an extra £22.6bn for day to day spending alongside an extra £3.1bn for capital projects. These announcements will all have a knock-on effect of funding for Holyrood.

Minimum wage to rise

In a measure already trailed by the UK government, Ms Reeves confirmed that minimum wages will rise, with rates for those over the age of 21 poised to increase to £12.21 an hour. Ms reeves said the move would be worth £1,400 a year for a full time worker.

She also announced an ambition to eventually have a “single adult rate” and in the meantime, the minimum wage for 18-year-olds will rise to £10 an hour.

The weekly earnings limit for carers allowance will rise to the equivalent of 16 hours a week at the national living wage, the largest increase since the allowance was introduced.

National Insurance contributions increase

This is a controversial pledge from Labour, given it vowed not to increase taxes on working people ahead of July’s election.

Opponents have warned some businesses, particularly self-employed people, will be hit by rises in employer contributions - amid fears it could hamper recruitment and staff retention.

Ms Reeves confirmed the rate will 1.2 percentage points to 15 per cent from April 2025 and the threshold for paying NICs will fall from £9,100 to £5,000.

She said this would raise £25bn for public finances.

Ms Reeves stressed: “I do not take this decision lightly.”

Capital gains tax to increase

The Chancellor confirmed rises to capital gains tax.

The headline rates of capital gains tax will increase, with the lower rate rising from 10 per cent to 18 per cent and the higher rate from 20 per cent to 24 per cent.

Inheritance tax

Ms Reeves claimed she was taking “a balanced approach” to changes to inheritance tax.

The UK government will extend a freeze on the threshold for inheritance tax, allowing £325,000 to be inherited without paying tax.

But the Chancellor announced that from April 2027, inherited pension pots will be subject to inheritance tax.

Fuel duty will not increase

The Chancellor announced that increasing fuel duty next year would be “the wrong choice” in the cost of living crisis and has decided not to increase it, despite speculation it was set to be hiked from next year.

Read more: Rachel Reeves confounds speculation with surprise fuel duty decision

Ms Reeves said she will continue the freeze on fuel duty next year and maintain the existing 5p cut.

She said: “There will be no higher taxes at the petrol pumps next year.”

Whisky duty to rise in line with inflation but cut to draft beers

Ms Reeves confirmed duty on non-drafted alcoholic drinks will “increase with RPI from February next year” but announced she is cutting draft duty by 1.7 per cent.

She said this will mean “a penny off a pint in the pub”.

The UK government will also roll out a levy on vapes, which will be increased in line with tobacco.

Private jet tax to be introduced

Air passenger duty is devolved to Holyrood but SNP ministers have not rolled it out due to a squabble with Westminster over an exemption for the Highland and Island airports. This means UK air passenger duty currently applies at Scottish airports.

Ms Reeves said air passenger duty “has not kept up with inflation” so needed to make “an adjustment”.

Read more: Why John Swinney has backed introducing a £21.5m tax on private jets in Scotland

She said the rise will mean “no more than £2 for an economy class”, but is taking “a different approach to private jets”.

The Chancellor told MPS she was “increasing the rates of air passenger duty by a further 50 per cent” on private jets.

Oil and gas taxes

Ms Reeves confirmed the government will “increase the rate of the levy to 38 per cent” which will “now expire in March 2030”.

She said the move will mean “the oil and gas industry can protect jobs and protect our energy security”.

Private schools to be subject to VAT

As promised by Labour during the election campaign, Ms Reeves confirmed she will introduce VAT on private school fees from January 2025.

Read more: 'Fear' of Labour's VAT change is already driving families away from Scottish private school

She added that the UK government will soon introduce legislation to remove business rates relief for private schools from April 2025.

Compensation schemes

Ms Reeves hit out at the Tory government failing to fund compensation schemes.

She announced she has set aside £11.8 billion to compensate those affected by the infected blood scandal and £1.8bn to compensate victims of the Post Office Horizon scandal, which she said had suffered “pain and injustice”.