Autumn Budget 2025: what it means for your money

Despite major reforms announced in last year’s Budget, including changes to capital gains tax and pension rules, the Chancellor continues to face pressure from the markets, the parliamentary Labour party and the electorate. With strong resistance to spending cuts, further tax rises have now been confirmed in the 2025 Autumn Budget.

From property and dividend taxes to ISA allowances and pension contributions these changes will affect how you save, invest and plan for the future. In this article, we explain what’s changing and what it means for you.

Tax and National Insurance (NI)

Dividend, savings and property income tax rates are rising

From April 2026, dividend tax will increase by two percentage points for basic and higher rate taxpayers, with the basic rising from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. From April 2027, savings and property income will follow suit.

These changes will affect anyone with general investment portfolios, rental properties or significant savings outside tax wrappers. Planning ahead to maximise allowances and consider tax-efficient structures will be key.

Income tax thresholds remain frozen until 2031

As wages rise, more people will be pulled into higher tax bands, increasing overall tax bills and continuing the trend of fiscal drag. Reviewing your tax position and considering strategies such as pension contributions  or charitable giving could help manage liabilities.

The State Pension triple lock remains in place, guaranteeing increases in line with the highest of inflation, earnings or 2.5%. The Chancellor confirmed that  this will result in an increase of 4.8% for pensioners from 6 April 2026.

Despite speculation on changes to CGT, the only change is the reduced CGT relief on qualifying disposals to Employee Ownership Trusts (EOTs) from 100% to 50%.  This applies to all disposals made on or after 26 November 2025.

Pensions

National insurance (NI) relief on salary sacrifice capped at £2,000 per year

From April 2029, the first £2,000 of salary-sacrificed contributions will remain exempt from NI, but any amount above that will attract both employer and employee NI contributions (NICs). This change could significantly impact higher earners and those using salary sacrifice as part of their retirement planning strategy.

As well as impacting retirement savings, it could also hit those utilising salary sacrifice to manage the £100,000 - £125,140 tax trap, which can result in an effective marginal tax rate of up to 62%, or parents seeking to maintain access to childcare benefits. 

With some time until the proposed rule is planned to come into effect, making bigger contributions ahead of this change including making use of pension carry forward rules could be worth exploring if you are in a position to do so.

Aside from the salary sacrifice NI relief cap, there are no additional pension reforms in this Budget. This stability will come as a welcome relief for many who had concerns over changes to tax-free cash and offers an opportunity to review long-term plans and ensure contributions are optimised under current rules.

Investments

Cash ISA allowance reduced to £12,000 for under-65s

From April 2027, the annual cash ISA allowance will be cut to £12,000 for those under 65, with the remaining £8,000 only permitted to be invested in stocks and shares ISAs. Stocks and Shares ISA allowances remain unchanged at £20,000 per tax year. Those over 65 can still save the full £20,000 allowance in cash. This move aims to encourage investment but will affect savers who prefer cash. Understanding risk tolerance and exploring investment options will become increasingly important for those considering increasing investment exposure.

In other ISA news, the government will be publishing a consultation early next year on the implementation of a new, simpler ISA product to support first-time buyers to replace the Lifetime ISA (LISA).

Increase in Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) limits (but VCT relief cut)

The government is raising investment limits for EIS and VCTs to £10 million, but VCT tax relief will be reduced from 30% to 20% from April 2026. While these vehicles remain attractive for tax-efficient investing, the changes make it essential to review their suitability carefully, particularly given the high risk involved with early-stage investments and their lack of liquidity.

Other notable changes

High-value council tax surcharge

A new annual surcharge will apply to properties worth over £2 million from April 2028, starting at £2,500 for homes worth over £2 million and rising to £7,500 for homes valued above £5 million. While there will be limited planning options to avoid this, it will be an important aspect to take into consideration as part of the cashflow modelling and retirement planning process.

Electric vehicle and hybrid mileage supplement

A new mileage supplement for electric and hybrid vehicles will be introduced. This will affect business mileage claims and fleet planning, so employers and employees should review policies accordingly.

Guidance and support navigating the Budget impact

The Autumn Budget brings with it a number of significant milestones in the coming years impacting income, investments, property, pensions and estate planning.

If you would like further guidance on the key changes from the Budget you can book a call with one of our Investment Coaches for free.

Book a session with a Coach

If you want help understanding the Budget’s impact on your financial plan, your investment portfolio or get a total wealth management perspective on your overall personal financial situation, the experts at our parent company, Evelyn Partners, can help. You can book an appointment to discuss what the changes mean for you, and how to navigate what’s next.

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