On Wednesday 26th November, the Chancellor delivered her Autumn Budget for 2025.
In the run-up to this, there was widespread debate over how Chancellor Reeves might raise additional revenue without breaching the Labour Party’s manifesto commitments.
As ever, we encouraged clients to sit-tight, avoid panicked decisions, and wait for confirmed details rather than reacting to speculation.
Whilst the media anticipated shifts to tax, pensions, and other areas, The Chancellor ultimately announced no alterations to capital gains tax or VAT, and no significant changes to pension rules.
For clients who held firm and avoided making premature moves based on rumours, this outcome is reassuring.
We've summarised the key points that may affect your financial plan. However, it's worth noting that none of these should provoke an impulsive change. If you have any questions regarding the budget and your financial plan, please get in touch with us and we can guide you in the right direction.
Income Tax
- The threshold freeze on income tax has been extended to 2031, three years longer than previously planned.
- Pay rises are therefore more likely to push income into higher tax bands (also known as "fiscal drag”).
High-Value Property Council Tax (Mansion Tax)
- Introduced from April 2028.
- Applies to homes in England valued at £2m+.
- Surcharge starts at £2,500 (for £2m–£2.5m properties) and rises to £7,500 (for £5m+).
- Requires the first revaluation of top bands since 1991.
- Around 100,000 properties, mostly in London/South East, will be affected.
Cash ISA Allowance Reduction
- Introduced from April 2027.
- Annual allowance for under-65s reduces from £20,000 → £12,000.
- Policy aims to encourage investment in growth assets i.e. stocks and shares.
Salary Sacrifice Pension Cap
- Introduced from April 2029.
- £2,000 annual cap on pension contributions made via salary sacrifice.
- Limits National Insurance savings for many private-sector employees.
- Income tax relief on pension contributions unchanged.
State Pension
- State pension rises 4.8% in April (tracking wage growth).
Dividend Tax
- Rates rise by 2 percentage points from April 2026:
- Basic rate: 10.75%
- Higher rate: 35.75%
- Additional rate: unchanged at 39.35%
- Clients who receive dividend income from investments or business shares should consider this in their financial plan.
Property & Savings Income Tax
- Rates increase by 2 percentage points from April 2027:
- Basic: 22%
- Higher: 42%
- Additional: 47%
Electric Vehicle Road Pricing
- Introduced from 2028.
- Per-mile charging introduced for EVs and hybrids to offset declining fuel duty revenue from petrol and diesel vehicles, thanks to an increase in EV usage.
- Charges will apply in addition to existing road taxes.
This content is for information purposes and should not be treated as financial advice. We would always recommend speaking to a professional before making decisions regarding your wealth.
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