26/11/2025
🇬🇧 2025 UK Budget — What it means for pensions & taxation:
Personal taxation -
- National Insurance (NI) and income tax thresholds frozen for extra three years beyond 2028, potentially dragging more people into higher tax bands over time.
- Amount under-65s can put into cash Isas (Individual Savings Accounts) capped at £12,000 a year, with the rest of the £20,000 annual allowance reserved for investments.
- Basic and higher income tax rates on property, savings and dividend income to increase by 2 percentage points.
Wages, benefits and pensions -
- Cap limiting households on universal or child tax credit from receiving payments for a third or subsequent child to be scrapped from April.
- Legal minimum wage for over-21s to rise 4.1% in April, from £12.21 to £12.71 per hour.
- Wage for 18 to 20-year-olds to go up 8.5%, from £10 to £10.85 per hour, as part of a plan to establish a single rate for all adults.
- Basic and new state pension payments to go up by 4.8% from April, more than the current rate of inflation, under the "triple lock" policy.
- People paying into their pension pot under salary sacrifice schemes to start paying NI on contributions above £2,000 a year from 2029.
- Help to Save scheme, which offers people on universal credit a bonus on savings, extended and expanded beyond 2027
- The previously mooted cut to the “tax-free lump-sum” from pensions (the 25 % that people often take — up to £268,275) has been ruled out — so that benefit remains unchanged for now.
The bottom line: The Budget delivers a meaningful state pension boost — but its tax-and-benefit changes (particularly on pension-scheme perks and frozen thresholds) mean many retirees and workers may end up paying more to the taxman 💼💼💼
For more information - https://www.gov.uk/government/organisations/hm-treasury
