Autumn Budget 2025: Key takeaways you need to know
By Boring Money
26 Nov, 2025
This year's Autumn Budget has arrived after weeks of intense speculation about pension reforms, property taxes, and potential income tax hikes. We now know what's actually changing and what it means for your money.
So what does it all mean? What's actually changing? And how does any of it affect you? We've pulled together the main takeaways so you can walk away from the Budget armed with the knowledge of how it impacts your finances and if you need to take action.
Let's dive in.
Budget Reactions
We’ll tell you what has been said. What is actually changing? And how does any of it affect you? We've pulled together the main takeaways so you can walk away bingofrom the Budget armed with the knowledge of how it impacts your finances and how you can respond.
In summary this Budget was:
The biggest change for most of us is the innocuous-sounding freezing of income tax thresholds until 2031. This will drag more and more people into higher tax bands. For example, wealth manager Quilter has estimated this could cause a worker earning £44,000 to be £3,000 worse off over the next four years.
1. Economic Outlook
In the lead-up to this Budget, the nation watched with concern as speculation mounted about the government's plans to plug an estimated £20-30 billion hole in public finances. On the day, the event itself was as dramatic as the lead-up.
The Chancellor filmed a video on the morning of the Budget acknowledging that the British people were angry. Not as angry as she was a few hours later when some previously employed person at the OBR published the Budget early by accident. Ouch.
Looking at economic growth and the outlook, the Chancellor confirmed new OBR forecasts that GDP this year will grow by 1.5%, an improvement from the previous forecast. But from then on, forecasts have been downgraded. Next year, predictions have been downgraded to 1.4%, compared to an earlier forecast of 1.9%, so growth remains fairly anaemic.
What do the experts say?
Many people will remember the car crash that was Liz Truss’ infamous mini-Budget. Financial markets want stability and books that balance. They don’t worry about the cost of living for individuals or who pays what – they just want enough money in the pot to support all the government borrowing and expenditure. Rachel Reeves delivered a Budget in line with their expectations, so financial markets stayed broadly steady in the hours after the Budget. This matters because bond markets basically determine the future rate of borrowing so we don’t want them to spike out of control.
On this basis, Rachel Reeves met one of key goals of this Budget - financial market stability.
2. State Pension
Current rules:
At the moment, the government's Triple Lock guarantee stipulates the State Pension goes up each year by either 2.5%, inflation, or earnings growth - whichever is the highest figure. The current full new State Pension is £221.20 per week or £11,973 per year for the 2025-26 tax year.
What's changing?
Not much to report here. The government has pledged to maintain the State Pension triple lock guarantee. The increase from April 2026 will be 4.8%, in line with earnings growth last year. This means over 12 million pensioners will receive a boost to their State Pension payments of up to £575 per year.
When does it happen?
The State Pension increase will come into effect from the start of the new tax year on 6 April 2026. The full new State Pension will be £12,547.60 (up from £11,973).
Important note
With the personal allowance frozen at £12,570 until at least April 2031, more pensioners relying solely on the State Pension will likely find themselves paying income tax for the first time as the triple lock pushes their pension income above the tax-free threshold. This could cause admin issues as millions of pensioners are forced to complete income tax returns.
What do the experts say?
The personal allowance freeze at £12,570 – which was also extended to 2029/30 today – does mean more state pensions will be taxed and that will accelerate in 2027/28 and subsequent years.[1] You won’t find many pensioners complaining about triple lock increases because of this, although plenty would argue that the personal allowance should be raised to remove the anomaly.
What concerns most people is how it will be taxed – at source or will state pensioners have to tackle the quite daunting self-assessment process? Currently the state pension will always be paid gross. If you have other PAYE income (e.g., from a private pension or employment), then HMRC will usually adjust the tax code on that income so that tax due on your state pension is collected through PAYE.
If the state pension is your only income and exceeds the Personal Allowance, then HMRC will usually issue a Simple Assessment after the tax year ends, telling you how much tax you owe and how to pay it. If you have other income not taxed via PAYE (e.g., rental income, or from self-employment), then you may need to complete a self-assessment tax return.
3. Salary Sacrifice
Current rules:
Right now, employees can boost their pension through salary sacrifice arrangements, which save both the employee and employer National Insurance contributions. Employees give up part of their pre-tax salary in exchange for increased pension contributions, and because this happens before tax and NI are calculated, employees get this amount free from tax and National Insurance, and employers don't have to pay NI on it.
What's changing?
A £2,000 annual cap will be introduced for contributions into pensions made under salary sacrifice. Contributions above this amount will not benefit from National Insurance relief. This will impact both employees and employers.
When does it happen?
April 2029.
Who does it impact?
This will particularly impact higher earners who make substantial pension contributions through their workplace, as well as employers who would face increased NI costs. This could lead to less generous pensions contributions from larger firms who have previously offered well-subscribed salary sacrifice schemes.
What do the experts say?
Capping National Insurance-efficient pension contributions at £2,000 by April 2029 to raise £4.7 billion would significantly weaken one of the most effective and accessible mechanisms workers have to build long-term savings through the workplace. Salary sacrifice has long enabled employees to contribute more to their pensions in a tax-efficient way. While a cap is preferable to scrapping the system entirely, it will still sharply limit how much many people can realistically afford to put aside for their future.
Steve Webb, former Minister for Pensions, now partner at Lane Clark and Peacock, confirmed that the impact was not restricted to higher-rate taxpayers,
Salary sacrifice change will affect about 25% of the basic-rate taxpayers who currently use it - over a million people.
This will affect millions of workers but it will affect basic rate taxpayers more than higher rate taxpayers because the main rate of National Insurance Contributions is 8% for employees but it is only 2% on income above £50,270.
“This will also affect thousands of employers given employer National Insurance is charged at 15% on all earnings above the Secondary Threshold (currently £5,000). A 2025 Aon Survey suggests 90% of employers offer salary sacrifice.
4. Tax-Free Pension Lump Sum
Current rules:
Currently, you can take up to 25% of your pension pot as a tax-free lump sum when you reach age 55 (rising to 57 in 2028), capped at £268,275. This has long been seen as a cornerstone of UK pension policy.
What's changing?
Nothing. After months of speculation leading to £ billions of early withdrawals, no mention was made of any changes in the Budget.
Reminder:
Changes announced in the Autumn Budget 2024 bringing pensions into Inheritance Tax from April 2027 remain on track. This means that from 6 April 2027, unspent pension pots will count towards estates for IHT purposes.
5. Income Tax
Current rules:
As at the 2025-26 tax year, the standard Personal Allowance is £12,570, which is the amount of income we can all earn and not pay tax on. Anything beyond this is subject to Income Tax, which is charged at different rates depending on which "band" you sit within. The existing Income Tax thresholds for England, Wales, and Northern Ireland are:
Income Tax Band | Taxable Income | Income Tax Rate |
Personal Allowance | Up to £12,570 | 0% |
Basic-Rate | £12,571 to £50,270 | 20% |
Higher-Rate | £50,271 to £125,140 | 40% |
Additional-Rate | Over £125,140 | 45% |
Correct as at 2025-26 tax year
For those in Scotland, the rates differ, and there are more bands with the advanced rate of 45% kicking in at £75,001, for example.
These thresholds have been frozen since April 2021, contributing to "fiscal drag" where inflation and rising wages push more people into higher tax brackets.
When does it happen?
They will be frozen for an additional 3 years to April 2031.
Who does it impact?
Frozen tax thresholds impact pretty much all of us. Since the freeze began in 2021, 4.4 million more people have started paying income tax, and a further 2 million have started paying higher-rate tax. The OBR estimates that 780,000 more people will be brought into paying income tax in 2029-30, largely as a result of the extensions to the freezes. This is arguably the most impactful announcement of the Budget and should not be underestimated, raising roughly an additional £8 billion every year.
What do the experts say?
Frozen thresholds impact everyone but the numbers are of course much bigger for those higher earners hovering around the £90,000+ area today. Getting a pay rise which takes you over £100,000 might sound like a dream come true but for those hoping to head North of this number over the next few years, look out. Quirks of the system will trap you in a nasty tax trap which will cost you more.
We all get a personal allowance – that’s £12,570 we can earn every year and not pay a bean of tax. Once your earnings head above £100,000 you start to lose this tax-free amount at the rate of £1 for every £2 over the threshold. So if you earn £2 over this, you lose £1 of this tax-free income. Which pushes your tax bill up. This £100,000 threshold has remained the same since it was introduced in April 2010 and means that people face an effective tax rate of 60% on money earned in between £100,000 and £125,140 (this is the 40 % tax rate + the progressive loss of your personal allowance). Once you earn more than £125,140 you lose all tax-free allowance AND you pay additional rate tax at 45p per £1.
The other impact for parents earning more than £100,000 is the loss of government-funded childcare for children under 3. This impacts about 100,000 parents today and as thresholds are frozen until 2031,it will impact many more in future.
People will feel the impact of these tax rises straight away. A bigger slice of any pay rise is lost to tax, which could discourage promotions or overtime. The additional tax burden would be £1,766 for someone who was on £80,000, £1,438 for those who earned £50,000, and £353for those on £35,000.
5. National Insurance Contributions for Pensions
The government is closing loopholes in the current Voluntary National Insurance contributions (VNICs) rules that allow those with a limited connection to the UK to build UK State Pension entitlement at a cheaper rate whilst overseas. To fix the most unfair elements of these rules, the government is removing access to the cheapest Class 2 VNICs for individuals abroad and increasing the initial residency or contributions requirement for VNICs to 10 years. The government is also launching a wider review of VNICs, with a call for evidence to be published in the new year.
6. Capital Gains Tax
No changes made. Current rates remain in place
Type of asset | Basic rate | Higher rate |
Shares | 18% | 24% |
Residential property | 18% | 24% |
Bitcoin/Cryptocurrency | 18% | 24% |
Other | 18% | 24% |
Correct as at 2025-26 tax year.
7. Dividend Tax
Dividend income is taxed at 8.75% for basic-rate taxpayers, 33.75% for higher-rate taxpayers, and 39.35% for additional-rate taxpayers. There is a £500 tax-free dividend allowance.
What’s changing?
Changes to tax on dividend income – The government is changing the rates of income tax applicable to dividends. From 2026-27, the ordinary rate will be increased by 2 percentage points to 10.75% and the upper rate will be increased by 2 percentage points to 35.75%. The additional rate will remain unchanged at 39.35%. This will be legislated for in the Finance Bill 2025-26.
When does it happen?
6 April, 2026.
What do the experts say?
Sarah Coles, head of personal finance at Hargreaves Lansdown, notes the London market is home to so many good income stocks, it means particularly harsh tax treatment if investors hold any of these investments outside an Isa or a self-invested personal pension.
Increasing tax rates on dividends, property and savings income by 2 percentage points will hit those who rely on investment income hardest. This will potentially affect small business owners and increases the tax burden on the individuals who are taking risks and driving economic growth. Moreover, this is a kick in the teeth for those in retirement and living on their hard-earned savings.
8. Property Tax
Current rules:
Income tax on rental income is currently set at our current marginal rate of income tax, starting at 20% for basic rate taxpayers in England, Wales, and Northern Ireland.
What’s Changing?
Tough new rules for landlords as income tax on their rental income will rise by 2% across the board from 2027. The rates will rise to 22% for basic-rate taxpayers, 42% for higher-rate taxpayers, and 47% for additional-rate taxpayers.
The Chancellor said this was designed to account for the fact that landlords don’t pay National Insurance on rental income, so this evens things up and makes it fairer.
What do the experts say?
Life has got progressively harder for landlords over successive years. This will likely contribute to more deciding to sell up and move on. This could of course have a negative impact for renters as someone will have to pay for this and so it’s another potential pressure point for rent increases.
9. Mansion Tax
Current rules:
Currently, there is no additional tax specifically targeting high-value properties beyond standard stamp duty and council tax (based on 1991 valuations).
What's changing?
A new “mansion tax” will be introduced on properties over £2m, expected to raise around £0.4bn. This will be known as the High Value Council Tax.
The additional extra annual cost will be a £2,500 levy on properties worth £2 million or more which will progressively increase to a £7,500 levy on properties over £5 million.
The Chancellor announced that there will be a consultation about people’s options to defer these payments, to acknowledge those who are property-rich but cash-poor. Think Downton Abbey!
When does it happen?
2028.
Who does it impact?
Any mansion tax or property wealth tax would primarily hit homeowners with high-value properties, particularly in London and the Southeast, where property prices are highest. However, experts warned this could create market disruption at the higher end as homeowners who purchased large family homes decades ago may be discouraged from downsizing if faced with unexpected tax liabilities. This could reduce the availability of larger homes for growing families and will hit the capital hardest.
What do the experts say?
Owners of properties valued between £1.5 million and £2 million will be breathing a sigh of relief that they have swerved this so-called mansion tax. Doubtless, the Treasury realised that at £1.5 million there would be a significant backlash from Labour voters with such properties in more affluent parts of the country, especially the South East of England.
Now it seems the burden will fall on those with the highest-valued properties, many of which will be in London. But with the measure not expected to come in until 2028, there is plenty of time for the law of unintended consequences to take effect. There could be widespread implications for the property market in the South East of England, where transactions could surge before the surcharge kicks in and sellers try to price properties below the threshold.
10. Cash ISA
Current rules:
Currently, UK savers have an annual ISA allowance of £20,000 which can be split between Cash ISAs and Stocks & Shares ISAs as they choose. All interest and gains within ISAs are tax-free.
What's changing?
Annual contributions to cash ISAs will be reduced to £12,000 a year. The rationale is to encourage more people to invest in stocks and shares rather than holding everything in cash. Stocks & Shares ISA will continue to have a £20,000 allowance. The changes to Cash ISAs will not apply to the over 65s, who will still enjoy the full £20,000 in Cash ISAs.
When does it happen?
April 2027.
Who does it impact?
Cash savers under the age of 65. Boring Money data confirms that there are 3.8 million UK adults under 65 who have cash ISAs but no shares ISAs, with a decent cash buffer of at least £10,000. These people could reasonably look to invest in the stock market for better long-term returns.
What do the experts say?
I’m a huge advocate of people investing their longer-term savings in the stock market, but restricting access to cash is unlikely to have the seismic effect the Chancellor wants. The main thing holding people back is a fear of loss. To tackle this, the industry needs to focus on a much clearer explanation of risks, but also do a better job of showing the upsides of the stock market which doesn’t have to be the wild ride of crypto and meme stocks. I don’t think we can create a nation of investors by restricting access to cash. In the same way that vegetarians won’t head for the steak if you limit their access to pulses! We create change here with better communication and better access to advice, not by rapping cash savers over the knuckles and trying to force their hand.
If this impacts you, there is a Plan B. You still have up to £20,000 you can pay into a Stocks & Shares ISA every year. This is just an empty account when you open it, and despite the name, no one forces you to buy shares in it. You can pay in £20,000 and then select what is known as a Money Market Fund. This behaves like cash and bestselling options paid returns of about 4.6% over the last 12 months.
Millions of savers rely on Cash ISAs as a low-risk way to build financial stability. Two-thirds of our Cash ISA customers have used the full £20,000 allowance so far this year. These aren’t people with excess wealth - they’re individuals and families working hard to save for the future. What’s more, only 38% of Cash ISA holders nationwide would consider switching to a Stocks & Shares ISA if the allowance is cut.
11. Business Rates
Current rules: The current business rates relief system provides reductions for eligible businesses, particularly in retail, hospitality, and leisure. The 2024 Budget introduced 40% relief for retail, hospitality, and leisure properties, up to a cash cap of £110,000 per business.
What's changing? This has been extended from 1 – 3 years so they remain eligible on their first property for 3 years after expanding into a second property
12. Enterprise Management Incentives (EMI)
The government is significantly increasing the company eligibility limits for the Enterprise Management Incentives scheme (EMI) to allow scale-ups to join start-ups in offering tax-advantaged shares to the talent they need to grow.
Some very good news today is the expansion of EMI schemes, which remains one of the most effective tools for attracting and keeping talent. Up until now, companies that had more than 250 employees and/or gross assets of over £30 million were excluded from benefiting from EMI. With effective from 6 April 2026, these limits will be increased to 500 employees and £120 million respectively, significantly increasing the number of growing companies that can benefit from this vital incentive.
13. Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS)
The government is doubling the company investment limits, as well as the gross assets test, for both EIS and VCT schemes. This means that from April 2026, the lifetime company investment limits will increase to £24 million (£40 million for Knowledge Intensive Companies (KICS)), and the annual company investment limits will increase to £10 million (£20 million for KICs). The gross assets test will increase to £30 million before share issue, and £35 million after.
However, to better balance the amount of upfront tax relief offered by VCTs compared to the EIS and incentivise funds to support high-growth companies, the government is reducing the upfront VCT Income Tax relief from 30% to 20%. This will kick in from April 2026.
The VCT scheme invests billions of pounds in up-and-coming UK companies. Cutting upfront tax relief on VCT shares from 30% to 20% undermines the incentive to invest in VCTs.
Individuals and advisers will be less willing to support high-risk young companies that will struggle to find funding from other sources. Far from nurturing economic growth as the Chancellor wants, it will cut off vital funding for ambitious, growing companies.
Wealth Club CEO Alex Davies also forecasts a shorter-term rush for VCTs before this measure comes in to play:
Investors will likely pile in before the end of year deadline, and popular VCTs will fill up even faster than usual. It really will be a case of buy now while stocks last.
14. Gambling Duties
Current rules:
Currently, Remote Gaming Duty is charged at 21% and Machine Games Duty at 20%.
What's changing?
Remote Gaming Duty will increase from 21% to 40% from 1 April 2026.
A new Remote Betting Rate will be introduced at 25% from 1 April 2027 within the General Betting Duty. This new rate will not apply to self-service betting terminals, spread betting, or pool betting.
Remote bets on horse racing will be excluded from these changes and remain taxed at 15%.
Bingo Duty will be abolished from 1 April 2026. Thank the Lord for that!
15. Sugar Levy & Dairy Exemptions ("Milkshake Tax")
Current rules
The Soft Drinks Industry Levy (commonly known as the "sugar tax") was introduced in 2018 and applies to soft drinks with added sugar. Currently, milk-based drinks are exempt from the levy, which charges manufacturers based on sugar content - £18 per hectolitre for drinks with 5-8g of sugar per 100ml, and £24 per hectolitre for drinks with more than 8g per 100ml, since you ask.
What's changing?
Chancellor Rachel Reeves will remove long-standing dairy exemptions from the UK's sugar levy, creating what critics have labelled a "milkshake tax". The plan would subject milkshakes and sweetened lattes to the Soft Drinks Industry Levy starting in April 2028, potentially raising up to £100 million toward the UK's £20 billion budget gap.
When does it happen?
1st January 2028
Who does it impact?
CEO Holly’s teenage daughter!
17. Other Key Takeaways
Electric Vehicle Road Tax
Electric vehicle and hybrid car drivers will be taxed from 2028. EV drivers will be charged 3p per mile on top of other road taxes, in new road pricing.
Fuel duty
Extending the 5p fuel duty cut until the end of August 2026 and cancelling the planned increase in line with inflation for 2026‑27. Further five-month freeze to fuel duty, followed by staged increases from September 2026, costing £2.4bn next year and £0.9bn each following year.
Two-child benefit cap
The Prime Minister has removed the two-child benefit cap, with the Chancellor stating children should not be "penalised" for being part of larger families.
The move generated the loudest cheer from the Labour backbenches of the session. This will be scrapped in April next year. The OBR estimates this will increase benefits for 560,000 families by an average of £5,310, lifting 450,000 children out of child poverty.
National minimum and living wage increase
From 1 April 2026, the National Living Wage will increase by 4.1% to £12.71 per hour. The National Minimum Wage for 18-20 year olds will also increase by 8.5% to £10.85 per hour, and for 16-17 year olds and apprentices by 6.0% to £8.00 per hour.
