Let’s make the Autumn Budget simple. This blog breaks down the most important announcements from the UK Government’s Autumn Budget 2025 – in plain English, with practical tips for your finances.
Whether you’re a sole trader, small business owner, or just trying to get your head around the cost-of-living changes, you’re not alone in this. Here’s what you need to know, and what it could mean for your wallet.
Overview: Big Picture Changes
This was Chancellor Rachel Reeves’ second Budget. While some details were pre-released (or accidentally leaked), the focus was clear: stability, fairness, and long-term investment.
Key points include:
- UK economic growth upgraded from 1% to 1.5% this year(Source: OBR Economic and Fiscal Outlook, Nov 2025)
- Inflation now expected to drop to 2.5% by 2026 and hit the 2% target by 2027
- Freezes on tax thresholds will last longer than previously planned
- New costs for EV drivers and higher taxes on dividends and savings
- Big changes to benefits for families and pension contribution rules
Personal Taxation: Freezes and Increases
Threshold Freeze Extended
- Income tax and National Insurance thresholds frozen until 2031, dragging more earners into higher bands as wages rise
Impact:
- A worker earning £35,000 could pay around £300 more per year in tax by 2028, despite no change in tax rates
Savings and Investments
- New cap on cash ISA contributions at £12,000/year for under-65s; remainder must go into investments
Investment Tax Increases
- Basic and higher rates of income tax on property, savings, and dividends to increase by 2 percentage points from April 2026(Source: OBR Economic and Fiscal Outlook, Nov 2025)
Wages, Pensions and Benefits
National Minimum Wage
- Over-21s: rising from £12.21 to £12.71/hour (4.1% increase)
- 18-20s: rising from £10.00 to £10.85/hour (8.5% increase)
State Pension
- Rising 4.8% under the triple lock, more than inflation
Universal Credit Reform
- The two-child limit for benefit payments will be scrapped from April 2026, supporting larger families
- Help to Save scheme extended and expanded past 2027
Pension Changes
- Salary sacrifice contributions will be capped at £2,000/year from 2029
- You must now live in the UK for 10 years to access a state pension
Impact:
- Higher income pension savers may lose tax benefits
- Returning expats and those abroad long-term may need to rethink retirement plans
Housing, Property and Council Tax
High-Value Properties
- Homes worth over £2 million will pay a council tax surcharge:
- £2,500/year for homes between £2m-£5m
- £7,500/year for homes over £5m
- A wider council tax revaluation is expected for Bands F, G and H
Transport and Vehicle Taxes
Fuel Duty
- The 5p/litre cut extended until September 2026
- Will gradually rise back over a six-month period afterwards
Electric Vehicle Tax
From 2028:
- Electric cars: taxed at 3p/mile
- Plug-in hybrids: taxed at 1.5p/mile
Impact on drivers:
- If you drive 12,000 miles per year in an EV:
- That’s £360 per year in mileage tax
- Plus £195/year for standard road tax (VED)
- Total cost: £555/year for EV use from 2028(Source: OBR Economic and Fiscal Outlook, Nov 2025)
Rail Travel and Disability Access
- Rail fares in England frozen for 2026 (first time since 1996)
- Luxury/premium cars excluded from the Motability scheme
Business and Online Sales
Small Parcel Duty
- From 2029, no more exemption for imported parcels under £135
- Aimed at levelling the playing field for UK retailers
Gambling & Bingo
- Online gambling tax rate increased from 21% to 40%
- Bingo duty abolished (was 10%)
Food and Drink Taxes
- Sugar tax extended to pre-packaged milkshakes and lattes from 2028
- Part of a push to improve public health, especially for children
Regional and Local Powers
- English regional mayors will be allowed to tax overnight hotel stays, similar to Scottish and Welsh powers
- NHS prescription charges in England frozen at £9.90 for another year
What You Should Do Next
- Check your tax code and allowances for 2025/26
- Review your pension contributions, especially if using salary sacrifice
- Understand your motoring costs, especially if you own or plan to buy an EV
- Employers: prepare for minimum wage increases and pension changes
Still not sure what this means for you or your business? You don’t have to figure it out alone.
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