Autumn Budget 2025: what you need to know

November 27, 2025

The Autumn Budget Announcement, which was delayed until 26 November 2025, was anticipated to be a “big one”, which would feature further fundamental changes to the structure of the country. However, as the Chancellor took her seat back next to the Prime Minister, general opinion was that the Budget was largely underwhelming, with more attention being drawn to the OBR’s erroneous early release of the Budget documents, giving the Country a “sneak peek” before the Announcement had even begun.

Turning to an overview of the Budget announcement itself…

Personal taxation

The Chancellor announced that both the National Insurance and Income Tax thresholds will remain frozen until 2031. The anticipated outcome is a further £8 billion in tax being raised as wages continue to increase thus bringing further individuals into a higher rate tax band, also known as “fiscal drag”.

Additionally, it was announced that Income Tax in respect of property, savings and dividend income would be raised by 2%. It is important to note that dividend income shall be affected the earliest, with the tax increase to be operative from April 2026. For property and savings income, this shall take affect as of April 2027. This is anticipated to raise £2.1 billion in further tax by 2030.

Those who utilise the tax-wrapper benefit of ISAs will also see a change, as the £20,000 per annum ISA Allowance remains in place, but from April 2027 only £12,000 per annum can be invested in Cash ISAs, with the rest needing to be invested in market-based ISA investments such as Stocks & Shares ISAs. This change will not affect over-65s and will not apply retrospectively.

Housing and property

The Chancellor announced the ‘Mansion Tax’ initiative for those in the highest Council Tax Bands F, G and H, which seemed to cause quite a stir in the House of Commons on Wednesday. Those with properties worth of £2 million shall face a further £2,500 surcharge, and for those with properties worth over £5 million the surcharge will increase to £7,500.

This will take effect as of April 2028 and is anticipated to raise £400 million in tax by 2030.

Salary & Pensions

Despite the frozen Income Tax thresholds creating a higher tax liability for those with increasing wages, the Chancellor has also provided consideration for the National Minimum Wage. The National Living Wage (for those over 21) is rising from £12.21 to £12.71 per hour, and the National Minimum Wage (for those 18 to 20) is rising from £10 to £10.85 per hour. It can be noted, however, that the increase in both the Living and Minimum Wage will, in turn, increase the Income Tax payable.

Both basic and new state pensions are set to increase by 4.8% as of April 2026, which does provide benefit to older generations. However, the increase, in combination with the personal allowance freeze, shall also mean that further pensioners will be brought into the self-assessment tax regime.

Salary Sacrifice Pensions have also been addressed by the Budget announcement, with major changes being made. From April 2029, there will be a £2,000 cap on the value of employee contributions made by salary sacrifice into a pension without paying National Insurance Contributions. This is anticipated to raise £4.7 billion in tax by 2030.

Young persons & Students

The Chancellor has committed to dedicating £5 million to secondary school libraries, and a further £18 million to improving playgrounds across England.

For young persons, training for apprentices under the age of 25 shall be made free from small or medium-sized companies.

18 – 21-year-olds on Universal Credit who are not in school or employment for over 18 months will be encouraged into work by way of 6-month work placements. The concept of encouragement, however, should be taken with a pinch of salt, as those who refuse work placements may have their Universal Credit stripped from them.

Benefits

There have been further changes to the benefit system as announced on Wednesday, including the announcement that the two-child cap on Universal Credit shall be scrapped. This will mean that families with two or more children shall receive an uplift in their Universal Credit payments to reflect their circumstances, rather than receiving the benefit for only two.

The Chancellor also announced that Motability would be removing luxury cars as options for lease. Prior to the announcement, it was possible for those in receipt of disability benefits to receive discounts on leases for Audis, BMWs and Mercedes. This has now stopped, with the expected saving to taxpayers anticipated to be £1.5 billion over five years. The scheme continues to operate, however without premium brands available.

The Chancellor also announced a change in the assessment for disability benefits to a face-to-face system. However, it has not yet been released as to how the Chancellor plans to roll out these assessments, and how to overcome potential challenges and complexities that face-to-face assessment brings.

Drinking and smoking

Tax is set to rise again for our various vices. The Chancellor announced an extension for the sugar tax to cover pre-packaged milkshakes and lattes, as well as a hike in the tax for alcohol and tobacco.

Business taxation

In addition to personal National Insurance Contribution thresholds being frozen, the threshold for employers is frozen too, meaning that costs will increase alongside wages of employees, in a ‘double-dipping’ fashion.

To boost UK companies, tax exemptions for overseas retailers shall be removed, which is likely to boost investment in UK-based smaller businesses.

Further taxation shall be applied to gambling, with gambling duty rising from 21% to 40%. This taxation increase, however, shall only apply to online casinos, and in-person casinos remain unaffected. General betting is also affected, with a tax increase from 15% to 25%, with the exception of horse racing. Bingo duty has also been abolished.

The gambling tax changes are anticipated to raise £1.1 billion in tax by 2030.

Transport

The Chancellor announced the extension of the 5p temporary cut in fuel duty until September 2026.

However, it is not all good news for motorists, as an Electric Vehicle Excise Duty shall be introduced from April 2028, with electric car drivers set to pay a road charge of 3p per mile, and plug-in hybrid users to pay 1.5p per mile. This is likely to be measured through MOTs and integrated into the current Vehicle Excise Duty System with the DVLA.

Electric car mileage tax is anticipated to raise £1.4 billion in tax by 2030.

Inheritance Tax

In last year’s Budget, we were informed of the changes relating to both Agricultural Relief and Business Relief . The changes were not welcome by any means, and after 12 months of consultation, the Chancellor announced that the reliefs are now transferable between spouses on death.

The outcome of this would be potential tax exemptions and reliefs (including the Nil Rate Bands) of up to £3 million on the second if the relevant circumstances are met. This does however highlight the absolute necessity of receiving legal advice around Inheritance Tax Planning and drafting or updating your Wills.

Whilst the transferrable reliefs are a win for Inheritance Tax saving, it has also been announced that the Inheritance Tax thresholds remain frozen until 2031 which, again, will bring in a significant amount of Inheritance Tax due to fiscal drag as the value of property and assets continue to increase.

It is important to note that the Chancellor has put into action the correct Inheritance Tax treatment for compensation payments made to victims of the Infected Blood Scandal. Previously, compensation payments were Inheritance Tax free, however there were evident issues on “second transfer” where the unspent compensation payment would ultimately be subject to Inheritance Tax under the surviving spouses’ Estate.

Next steps

Whilst there are various points of discussion following from the Budget Announcement, it can be said that there are no drastic measures to take in respect of asset preservation.

Our advice, as it always is, is to ensure that your Wills are up-to-date and that you have sought Estate planning and Inheritance Tax planning advice, to ensure that your Estate is preserved and protected for future generations.

If you do wish to speak with us regarding either planning or your Wills following the Budget, please contact us.

Jessica McDonald

Solicitor, Private Wealth & Inheritance

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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.