Published - Wednesday 26th November 2025

Following months of endless rumour, speculation and ‘policy testing’, Chancellor Rachel Reeves has delivered her 2025 Autumn Budget, outlining the government’s plans for this tax year and beyond.

Given the hype around this year’s budget, we were relieved not to see any more big changes announced, particularly for pensions, but there are a few targeted changes coming to various areas of our personal finances, including retirement, savings and property income, and cash ISAs.

ISAs

From April 2027, the cash ISA limit will be reduced to £12,000 for under 65’s whilst remaining at £20,000 for stocks & shares ISAs. This protects those in retirement who are looking to take less risk with their savings, and encourages younger ‘accumulators’ to look towards investments rather than cash. 

There was however, no mention of the proposed ‘UK ISA’, floated to try and encourage investment in UK listed companies.

We will await to see whether they will close a potential loophole that currently exists, where stocks & shares ISAs can be transferred to cash ISAs and vice versa!

In addition, the government will be reviewing the current Lifetime ISA, with the aim of providing a simplified product to help young people save towards a property. Any new product will replace the current Lifetime ISA. There is likely to be a window of opportunity to transfer any Lifetime ISAs to the new product. Further updates expected in 2026.

State Pension: Triple Lock Maintained

The Triple Lock remains in force for the duration of this Parliament. In April 2026 the Single Tier State Pension will rise by 4.8% to £12,547 a year

The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year.

Personal Tax Thresholds Frozen Until 2031

The freeze on income tax thresholds and the National Insurance secondary threshold will continue until 2031. 

In practice, this means, as wages rise, more people will gradually move into higher tax bands. Known as “fiscal drag”, this increases overall tax paid without changing headline tax rates.

Taxes on Dividends, Savings, and Property to Increase

To bring asset-based income more in line with earnings from work (which are subject to National Insurance), the government will increase by 2% the tax rates applied to:

• Dividends from April 2026
• Savings income from April 2027
• Property income from April 2027

This means you will pay 2% more tax on savings interest, share dividends and rental income. This doesn’t include income from ISAs or investments held in pensions.

Don't forget, basic rate tax payers can earn £1,000 in savings interest and £500 in dividends before tax is applied. This reduces to £500 in savings interest for higher rate tax payers. 

High-Value Council Tax Surcharge

From 2028, properties valued at over £2 million will face a new surcharge. As a result, high-value homes—particularly in London and the South East—will see Council Tax bills rise meaningfully.

For properties valued above £2m the surcharge will be £2,500 pa with properties valued at £5m+ charged an additional £7,500. 

The government points out that some Band D homes outside London currently pay more council tax than multi-million pound homes in central London. This surcharge is designed to correct that imbalance.

Salary Sacrifice Pension Contributions Capped

From 2029, the NICs relief available via salary sacrifice pension contributions will be capped at the first £2,000 contributed per year.

What this means in practice:

Higher earners who use salary sacrifice extensively will lose a significant NIC advantage. Basic-rate taxpayers are largely protected—74% are unaffected.

Pension saving remains highly tax-efficient, but the strategy becomes slightly less beneficial for larger contributions via salary sacrifice.

Energy Bills Cut by Around £150 a Year

From April 2026, the government will remove the Energy Company Obligation levy from bills and take on 75% of the legacy Renewables Obligation for three years. In practical terms, this equates to an average £150 reduction in household energy bills,

IHT Relief

The £1m allowance for the 100% rate of agricultural property relief and business property relief will be transferrable between spouses and civil partners from April 2026. 

This simplifies the planning for larger farms and businesses where reliefs can now be claimed on the second death. 

Finally, in case you missed it....

This wasn't in the budget, but it was announced a few days ago, that from 1st December 2025, savings in institutions covered by the FSCS (Financial Services Compensation Scheme) would be protected up to £120,000 per person, up from £85,000. This extends cover for joint accounts to £240,000.

Please note

The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice. 

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.  

Thanks for reading!