01/12/2025
The UK Government has just announced its 2025 Autumn Budget, outlining how its policies will impact the economy and households across the country. By staying informed about what's new and what remains the same, you can make well-informed decisions about your financial future.
We’ve broken down the key points below, so you can focus on what matters most to you.
Seek professional advice
Tax treatment depends on individual circumstances and may change in the future. If you’re unsure about how any Budget changes may affect you personally, you may wish to seek advice from a qualified financial adviser or tax professional.
ISA allowances and tax
Tax rules and allowances are subject to change. The value of any tax benefits will depend on your personal circumstances.
ISA allowances
What’s changing
The annual Cash ISA allowance will be reduced to £12,000 for under-65s. This will come into effect in April 2027.
The overall ISA subscription allowance will remain at £20,000.
The Government also confirmed the overall ISA limit will remain as £20,000 until 2030/31.
What you might want to consider
Maximise your current ISA allowances ahead of the change in 2027.
Savers might want to re-evaluate whether a Stocks & Shares ISA might make more sense - particularly for long-term goals - given the lower cash-ISA cap.
Income tax
What’s changing
The freeze on income-tax thresholds has been extended through to April 2031.
Property income tax will increase by 2% across all tax bands in April 2027.
What you might want to consider
Factor any threshold freezes into your future budgeting, as more of your income may become taxable.
For landlords or property investors, re-evaluate rental yield and return assumptions under the new levy regime.
Consider alternative investments other than Buy to Let.
Dividend tax
What’s changing
Dividend tax rates are increasing: both the basic and higher-rate bands for dividend tax will see a 2% increase from April 2026: the new rates will be 10.75% (basic) and 35.75% (higher rate).
Additional rate remains unchanged.
This makes dividend-income outside tax-efficient wrappers more costly.
What you might want to consider
Review how much of your dividend income sits outside tax-efficient accounts. Making sure to maximise your ISA allowances or alternative wrappers.
As part of your longer-term investment planning, adjust return expectations to account for higher dividend tax drag.
Self-employed or company directors may want to review how income is extracted from their business.
Stamp duty and property-related taxes
What’s changing
A new “high-value property surcharge” will apply to homes valued at £2 million or more, starting April 2028. This will rise to £7,500 per year for properties valued above £5 million.
Standard stamp duty and property taxes remain in place.
What you might want to consider
If you own - or plan to buy - a property over £2 million, factor in the potential future surcharge when doing cashflow and long-term wealth planning.
Pensions and salary sacrifice
What’s changing
From April 2029, salary-sacrifice pension contributions above £2,000 per year will no longer be exempt from National Insurance Contributions (NICs).
What you might want to consider
Review your overall pension planning strategy, taking into account the potential increase in the cost of funding your retirement.
Salary sacrifice will remain useful, but above £2,000 it loses NI advantage post-2029.
Recalculate long-term retirement savings projections under the new rules to evaluate whether contribution levels need adjusting.
The above is a summary of some of the changes, to see a complete list of the Budget changes, please visit the official Government website.
