Autumn Budget 2025: What It Means for You

After months of speculation, the chancellor, Rachel Reeves, has delivered the Autumn Budget for 2025. Many predictions proved wide of the mark, and the early release of key details by the OBR added an unexpected twist, but now we have clarity on the confirmed changes and what they could mean for your personal finances.

This year’s Budget comes after a challenging backdrop. Last year, Reeves’ maiden Budget aimed to fill a reported £22 billion gap in public finances. Twelve months on, she faced an even tougher landscape, announcing an estimated £26 billion of tax rises to be delivered by 2029/30.

The headlines regarding GDP, national debt, and inflation

The government expects borrowing to fall more over the rest of this parliament than in any other G7 country. GDP is forecast to grow by 1.5 per cent in 2025, above the OBR’s earlier 1 per cent prediction. Growth is expected to be 1.4 per cent in 2026, 1.6 per cent in 2027, 1.5 per cent in 2028, and 1.5 per cent in 2029, all slightly below March forecasts.

Weaker productivity growth means tax receipts are expected to be £16 billion lower in 2029/30 than previously anticipated. Inflation is projected to fall over the next three years, standing at 3.5 per cent in 2025, 2.5 per cent in 2026, and 2 per cent in 2027. National debt stands at £2.6 trillion this year, with £1 in every £10 of government spending going towards interest payments.

Tax threshold freezes extended until 2031

The government has kept to its manifesto promise of not raising Income Tax or National Insurance rates, but Income Tax thresholds will remain frozen until April 2031. Similarly, the Inheritance Tax threshold freeze is extended from 2030 to 2031, raising £8 billion for the government. While this will not directly increase tax bills, fiscal drag may mean more income and wealth are exposed to tax over time. Pension pots will fall within IHT from April 2027, and reliefs for business and agricultural assets will be reformed from April 2026.

The tax rates on dividends, savings, and property income

Dividend, savings, and property income tax rates will rise. From April 2026, ordinary and upper rates on dividend income increase by two percentage points to 10.75 per cent and 35.75 per cent, while the additional rate remains at 39.35 per cent. From April 2027, property and savings income tax rates rise by two percentage points across all bands to 22 per cent, 42 per cent, and 47 per cent.

Even with these changes, 90 per cent of taxpayers will continue to pay no tax on savings. The increases are expected to raise £2.2 billion by 2029/30, mainly impacting business owners and landlords.

The ISA allowance and other frozen allowances

From April 2027, the Individual Savings Account allowance for under-65s will change. £8,000 of the current £20,000 allowance will be reserved for investments, leaving £12,000 for other accounts such as Cash ISAs. Over-65s retain the full £20,000 allowance. Junior ISAs and Lifetime ISAs remain frozen at £9,000 and £4,000 per year until 2031.

Salary sacrifice on pension contributions

Salary sacrifice schemes will be capped at £2,000 per year from April 2029. Contributions above this will attract employer and employee National Insurance contributions. Low- and middle-income earners can continue to use salary sacrifice as normal, while high earners will see increased National Insurance costs.

New “mansion tax” on high-value properties

A property surcharge will apply to the top 1 per cent of properties. Homes valued between £2 million and £2.5 million will pay £2,500, rising to £7,500 for properties over £5 million. This is expected to raise £400 million by 2031.

Welfare reforms

Changes to winter fuel payments and health-related benefits will cost £7 billion by 2029/30. The removal of the two-child benefit cap is expected to cost £3 billion.

State Pension

Overseas access to Class 2 National Insurance contributions will be removed, and residency and contribution requirements increased for those living abroad. The triple lock remains, with a 4.8 per cent increase to the basic and new State Pension from April 2026, worth up to £575 per year depending on entitlement.

Changes affecting business owners

National Living Wage and National Minimum Wage will increase from 1 April 2026. Workers aged 21 and over will see a rise of 4.1 per cent, from £12.21 to £12.71 per hour, adding around £900 a year for full-time employees. Workers aged 18–20 will see an 8.5 per cent rise, from £10 to £10.85 per hour, and younger workers and apprentices will see increases of 6 per cent, from £7.55 to £8 per hour.

Listing Relief from Stamp Duty Reserve Tax will support entrepreneurs. Capital Gains Tax relief for Employee Ownership Trusts reduces from 100 per cent to 50 per cent from November 2025, raising £0.9 billion from 2027/28. Apprenticeships for under-25s will be fully funded from April 2026. More than 750,000 retail, hospitality, and leisure properties will benefit from reduced business rates, funded by higher rates on properties over £500,000. Customs duty will apply to parcels of any value from March 2029.

Other announcements affecting households

Household energy bills are expected to fall by £150 a year in 2026 following the scrapping of the ECO scheme. A new Electric Vehicle Excise Duty will apply from 2028 at 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids, rising with CPI. Fuel duty is frozen until September 2026, with a “fuel finder” expected to save households £40 a year. The sugar tax will be extended to milk-based drinks from 1 January 2028.

Spousal exemption for agricultural and business asset IHT relief will be introduced. Tobacco and alcohol duties will be uprated, with alcohol duty rising with inflation. Online gambling taxes will increase: Remote Gaming Duty rises 21 per cent to 40 per cent from April 2026, and a new Remote Betting Rate of 25 per cent will apply from April 2027, excluding horse racing.

Other key thresholds that remain the same

Several important thresholds remain unchanged, including the pension Annual Allowance, Stamp Duty Land Tax for residential properties, and headline rates of Income Tax, National Insurance, and VAT.

The Autumn Budget contains a wide range of measures that could influence your financial plans.

If you would like support in understanding how these changes may affect your long-term goals, we are here to help.

As always, if you should have any questions, please do not hesitate to get in touch.

Please note

All information is from the Budget documents on this page.

The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice. 

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.