The Budget 2025
What you need to know
Earlier today, Chancellor Rachel Reeves delivered her Autumn Budget Statement, providing an update on the health of the British economy.
We break down what the changes mean for businesses, households, individuals, pensions, public services, and the UK economy at large. So you can see exactly who benefits, who pays more, and what to watch going forward.
Thresholds
Income tax and equivalent national insurance thresholds for employees and the self-employed will remain at their current levels for a further 3 years to April 2031.
Plan 2 student loan repayment threshold will be kept at the 2026/27 level for three years from April 2027.
ISA Reform (from April 2027)
The cash limit will be set at £12,000 but will remain at £20,000 for the over-65s.
You can still invest the full £20,000 allowance but £8,000 will be designated exclusively for investment.
Taxation of income from assets
A new 2% tax rate will be introduced for the following:
Dividends (from April 2026)
Dividends that fall into the basic rate
of tax will incur a 10.75% dividend tax charge.
35.75% dividend tax where dividends fall into the higher rate.
There are no changes to the additional rate of dividend tax.
Property & Savings Income (from April 2027)
Taxes for property income will incur 22% of tax (from 20%) that fall into the basic rate of tax and 42% (from 40%) in the higher rate. Additional rate will be 47%.
Savings income will also increase by 2% across all tax bands.
Business rates
From 1st April 2026, bills in England will be updated/revalued.
Introduction of two new permanent lower business rate multipliers for the retail, hospitality, and leisure sectors for eligible RHK properties with rateable values below £500,000.
There will be a high business rate multiplier for properties valued over £500,000.
High Value Council Tax Surcharge (in England)
From April 2028 properties worth more than £2 million will incur a £2,500 surcharge.
A £7,500 surcharge applies where a property has a value of £5 million or more.
Employee Ownership Trusts
From 26th November 2025, the Capital Gains Tax relief available on qualifying disposals to Employee Ownership Trusts when businesses are sold will be reduced to 50% from 100%.
National minimum and living wage (from 1st April 2026)
Will increase an hour for eligible workers to:
£12.71 for people aged 21 and over.
£10.85 for 18 to 20 year olds.
£8 for 16 to 17 year olds.
Pension Salary Sacrifice
From 2029, the amount that can be sacrificed via your salary without paying national insurance contributions is to be capped at £2,000.
Contributions above that are taxed in the same way as other employee pension contributions.
State Pension
This will be increased by 4.8%.
Resulting in an additional £440 for the basic state pension and £575 for the new.
Government to ensure people who only receive the basic state pension do not have to pay small amounts of tax through simple assessment from April 2027.
Electric and plug in hybrids vehicles
Electric vehicle excise duty on electric cars to be introduced from April 2028.
This will be payable each year alongside the vehicle excise duty.
The rate will be 3 pence per mile for electric cars and 1.5 pence for plug in hybrids.
Increasing the expensive car supplement for new electric vehicles to £50,000.
Have delayed changes to benefit-in-kind rules for employee car ownership schemes.
Gambling (from April 2026)
Remote Gaming Duty will be increased from 21% to 40% from April 2026, with bingo duty being abolished.
Duty on-line betting to be 25% from 15%.
Other
Two-child benefit cap will be abolished.
Freeze in prescriptions and rail fares.
Fuel duty is frozen until September 2026.
Class 2 national insurance contributions for people living abroad to be abolished.
Government funding to make the training for under 25 apprenticeships completely free for Small and Medium Sized Enterprises. Fuller details to be published.
Bringing in a permanent 40% first year allowance for main rate assets for a business.