The 2025 Budget
November 2025
Please find enclosed/attached our summary of the Autumn Budget delivered by the Chancellor, Rachel Reeves, on Wednesday 26 November.
The Government’s challenge in its second Budget was how to promote a fairer and more sustainable tax system to promote growth, support public services and help families. The overall price tag of Rachel Reeves’ increased taxes and reduced expenditure will sit at around £26 billion.
Income tax and other main tax rates remain essentially unchanged and frozen for longer, but the taxation of dividends, savings income and property income will rise over the next few years.
Among the wide range of measures were:
The personal allowance and the existing income-tax thresholds remain fixed at their current cash values for a further three years to 2030/31.
Tax rates on savings income, dividends and property income will increase by 2 percentage points from 2026/27, except for the additional rate on dividends which will stay at 39.35%.
Fuel duty will increase in stages by 1 pence per litre on 1 September 2026, a further 2 pence on 1 December 2026 and a final 2 pence on 1 March 2027.
A new usage-based Electric Vehicle Excise Duty (eVED) will be introduced from April 2028 establishing a charge per mile for electric cars. Average EV drivers are expected to pay around £240 a year initially and plug-in hybrid cars will attract a reduced rate.
From 1 April 2026, new permanently lower multipliers apply to eligible retail, hospitality and leisure properties with rateable values below £500,000. For all higher value business properties, a new multiplier will apply.
A High-Value Council Tax Surcharge will apply from April 2028 to residential properties valued at £2 million or above, in addition to existing council-tax liabilities, to be charged to the property owner.
From 6 April 2029, the amount that an employee may contribute to a pension through salary sacrifice without paying national insurance contributions (NICs) will be capped at £2,000 a year.
The individual savings account (ISA) subscription limit remains £20,000. But from April 2027, savers under age 65 must invest at least £8,000 of the annual ISA allowance in qualifying investments such as shares and authorised funds, rather than in cash.
The two-child limit for Universal Credit is abolished. Families with more than two children will no longer see their entitlement restricted.
As ever the Budget publications contained a wide range of detailed proposals and much to digest. If you have any questions about what you should do next, please get in touch.
