Autumn Budget for 2025. In this update, we’ll outline some of the key changes and what they might mean for you. 

Tax threshold freezes extended until 2031

In brief, Income Tax thresholds will remain frozen for a further 3 years beyond 2028. Notably, this will remain in place until April 2031. Similarly, the Inheritance Tax (IHT) threshold freeze is extended from 2030 to 2031.

Tax rates on dividends, savings, and property income will rise by two percentage points 

Also, Tax rates are set to rise for dividends, savings, and property income.

• Dividends: From April 2026, ordinary and upper rates of tax on dividend income will rise by two percentage points. Notably, to 10.75% and 35.75% respectively. There is no change to the additional rate, which will remain at 39.35%.
• Property and savings: From April 2027, the rate of tax on property and savings income will increase by two percentage points. This will be across all tax bands to 22%, 42%, and 47% respectively.

It is proposed that 90% of taxpayers will still pay no tax on their savings. However, these changes are set to impact business owners and landlords.

ISA allowance will be reformed for under-65s

From April 2027, the Individual Savings Account (ISA) allowance will change for under-65s.

Currently, adults can contribute £20,000 across their ISAs, including Cash and Stocks and Shares ISAs, each tax year.

From April 2027, £8,000 of this allowance will be reserved exclusively for investments. This leaves an available £12,000 that savers can pay into their non-investment accounts, such as Cash ISAs.

Over 65s will continue to be able to save up to £20,000 in a Cash ISA each year.

The allowances for Junior ISAs and Lifetime ISAs are frozen until April 2031. Notably, at £9,000 and £4,000 a year, respectively.

Salary sacrifice on pension contributions to be capped at £2,000

The government will charge employer and employee National Insurance contributions (NICs) on pension contributions above £2,000 a year made via salary sacrifice. This will take effect from 6 April 2029.

It is cited that many of those on low and middle incomes will be able to continue using salary sacrifice as normal. Meanwhile, high earners can expect to pay increased NI.

New “mansion tax” on high-value properties

A “mansion tax” will affect the top 1% of properties. The new property surcharge will be paid alongside Council Tax.

In summary, there will be four price bands. Thus, £2,500 for a property valued between £2 million and £2.5 million. For properties valued more than £5 million, the levy will be £7,500.

Welfare reforms expected to increase by 2029/30

The two-child benefit cap will be removed.

State Pension: Committing to the triple lock 

The government confirmed its commitment to the triple lock. From April 2026, this will increase the basic and new State Pension by 4.8%. Subsequently, giving an additional £575 per year to pensioners, depending on their entitlement.

National Living Wage

Increases to both the National Living Wage (NLW) and National Minimum Wage (NMW). 

From 1 April 2026, the NLW paid to workers aged 21 and over will rise by 4.1%. Notably, from £12.21 to £12.71 an hour. This increases annual income by approximately £900 a year for full-time employees.

For those aged 18 to 20, the NMW will rise by 8.5% from £10 to £10.85 an hour. Therefore, equivalent to around £1,500 a year if working full-time.

For 16- and 17-year-olds, and those on apprenticeships, the NMW will rise by 6%. Rising from £7.55 to £8 an hour.

Other announcements that may affect you

• Household energy bills will fall. The Energy Company Obligation (ECO) scheme is being scrapped. Hence, families will save £150 a year, on average, in 2026.
• New tax on electric vehicles. The Electric Vehicle Excise Duty (eVED) will come into effect in 2028. This equates to 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids. The rate per mile will increase annually in line with the CPI.
• Fuel duty will be frozen until September 2026. In addition, a new “fuel finder” will help drivers find the cheapest fuel. This will save the average household £40 a year.
• Reducing the levy threshold on soft drinks. From 1 January 2028, the sugar tax will also be applied to milk-based drinks. This includes bottled milkshakes and lattes.
• A spousal exemption for agricultural and business asset IHT relief. Unused combined business and agricultural asset IHT relief will become transferable between spouses and civil partners.
• Tobacco Duty and Alcohol Duty will both be uprated. Tobacco Duty will be uprated as announced last year, and Alcohol Duty will now rise with inflation.
• Rising taxes on online gambling. From April 2026, Remote Gaming Duty will increase by 21% to 40%. A new Remote Betting Rate set at 25% will be introduced from April 2027. However, horse race betting will be exempt from the changes.

Please note

All information is from the Budget documents.

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. Subsequently, we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Accordingly, please obtain professional advice before entering into or altering any new arrangement.

Autumn Budget for 2025. To understand how we can help you with your financial planning and long-term retirement goals, call us today. For a free initial consultation, call us on 01603-957599.