The 2025 Autumn Budget
Your Autumn Budget update – the key points and what they may mean for you
After much speculation, the Chancellor has now delivered the 2025 Autumn Budget. It’s fair to say that many of the anticipated surprises failed to materialise, and whilst some changes will affect personal finances over the coming years, there were no real bombshells to contend with! That being said, if you are concerned about anything that might affect you, please get in touch with us. We are here to support you, after all.
To summarise, the main changes are as follows:
Tax thresholds frozen until 2031
Income Tax and IHT thresholds will remain frozen for three extra years. Although rates aren’t rising, more of your income and assets may gradually fall into higher tax bands.
ISA allowances
From April 2027, up to £8,000 of the annual £20,000 ISA allowance will need to be invested rather than held in cash. Savers over 65 can still put the full amount into Cash ISAs.
Junior ISA and Lifetime ISA limits are frozen until 2031 at £9,000 and £4,000 pa respectively. The government is also consulting on the abolition of the Lifetime ISA – more on this next year.
Salary sacrifice pension changes
From April 2029, employer and employee NI will apply to pension contributions made through salary sacrifice above £2,000 a year. There’s nothing you need to do immediately and we’ll keep you updated as more detail is released.
VCT changes
Upfront tax relief on new VCT investments will be reduced from 30% to 20% from April 2026, making this the final year to benefit from the full relief. The positive news is that the VCT scheme has been extended until April 2035, as well as there being an increase in the size of companies that VCTs are able to invest in.
This suggests to us that VCTs remain supported despite the tax relief haircut.
Higher tax on dividends, savings and property income
Tax on dividend income, savings interest and property income will rise by two percentage points. This is likely to affect business owners, landlords and investors most.
Dividends will be affected from April 2026 and savings interest and property income from 2027.
Mansion tax
A new ‘high level council tax surcharge levy’ will apply to residential properties worth over £2 million, paid alongside Council Tax. This is planned to commence from April 2028 after a national revaluation exercise. The levy will start at £2,500 per year and increases in line with property values – the maximum levy of £7,500 will apply to properties valued over £5million.
Updates for business owners
A number of changes will impact businesses, including reduced CGT relief when selling to an Employee Ownership Trust, higher minimum wage rates, funded apprenticeships for under-25s, and lower business rates for many retail, hospitality and leisure properties. Stamp Duty Reserve Tax relief and changes to customs duty are also on the way.
Other notable measures
Energy bills are expected to fall in 2026 as the ECO scheme ends. Electric vehicles will face a new per-mile tax from 2028. Fuel duty remains frozen, and drivers will gain access to a “fuel finder” service – helping drivers to find the cheapest fuel. The sugar tax will extend to milk-based drinks, and duties on tobacco, alcohol and online gambling will all rise in line with the announcements.
We hope this is helpful and if there is anything that you are worried about or if you need any clarification, please do get in touch.
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