LONDON, U.K.: Britain's latest budget has left savers and high earners tallying up new costs, after the government unveiled a broad package of tax increases that money managers say could discourage long-term saving.

Finance minister Rachel Reeves announced more than £26 billion (US$34.4 billion) in tax hikes to reinforce public finances. Several of the measures fall directly on pension contributions, investment income, and property, affecting those with higher levels of wealth.

Official forecasters said the changes will push total public sector receipts to £1.5 trillion and bring the tax burden to 42.4 percent of GDP by 2030-2031, the highest level since World War Two, primarily by pulling more people into higher tax bands.

Financial markets initially reacted positively, with stocks and government bonds rising on expectations that the budget would strengthen perceptions of UK fiscal discipline.

"Chancellor Rachel Reeves opted for stealth tax rises and symbolic measures targeting wealth and property, while avoiding the inflationary consequences of new business taxes," said Tim Service at Jupiter Asset Management.

Key measures include reduced tax benefits on salary-sacrificed pension contributions and higher taxes on dividends, property, and savings income. Together they are expected to raise 7 billion pounds, according to the Office for Budget Responsibility.

The tax-free allowance for ISAs, currently £20,000, will be cut to £12,000 for under-65s from 2027, part of a broader effort to nudge savers into investing in UK stock markets.

Shares in fund managers climbed on expectations that more savers might switch toward investment products to preserve tax advantages. St James's Place rose 5.3 percent, Aberdeen 2.6 percent, AJ Bell 3.2 percent, and IG Group jumped 10.3 percent.

Other adjustments, including a new levy on homes valued above £2 million, will take longer to show their full impact, wealth advisers said. "I think what we'll see is a lot of postponed investment decisions," said Jim Brown of Blick Rothenberg.

One of the most contentious proposals among investors is the scaling back of tax benefits on salary-sacrifice pension schemes from 2029. Official estimates suggest the measure will raise £4.7 billion in 2029-2030, more than initially predicted.

Salary-sacrifice arrangements allow employees to divert part of their pre-tax income into their pension, reducing tax liabilities for both workers and employers. From 2029, the tax break will be removed for contributions above £2,000 a year, a change that will affect higher-paid workers most.

"Any step that disincentivises people saving is unhelpful," said Simeon Willis, chief investment officer at XPS.

Some pension experts warned that the long lead time before implementation could complicate enforcement. Former pensions minister Steve Webb said the three-year gap gives companies room to adjust arrangements before the policy takes effect.

"Three years to prepare is incredible, and they just won't get the money … Unpicking salary-sacrifice is messy," Webb said, noting that some top earners could lower base salaries and have employers fund pensions directly instead.