On November 26th, 2025, the Chancellor of Exchequer, Rachel Reeves, delivered the Autumn Budget 2025, which aims to balance fairness, growth and responsible public spending. This budget is targeted to cut down the cost-of-living, support public services, boost growth, tackle inequality and maintain fiscal responsibility. Reeves expects that the UK economy will grow faster by 1.5% instead of 1% as previously predicted in 2025, but growth forecasts for 2026 – 2029 have shown the downgraded economic growth. Early OBR data have lowered the UK borrowing costs as Gilt yields initially dropped by 0.07% points, but investors quickly reversed the course because the full outlook appeared worse than initially thought.

12 Key Changes at a Glance in 2025 Budget

The main changes that will impact individuals or a firm are highlighted below:

Individual Savings Accounts (ISA) system reforms

In the Individual Savings Accounts (ISA) system, reforms have been made. ISAs each tax year will remain at £20,000, but now some part of it must go into investment. Out of £20,000, you can put £12,000 into any type of ISA, but you are required to put £8,000 only into investment ISAs like stocks and shares ISAs. If you are over 65, you can still put the full £20,000 in any type of ISAs if you want.

Impact

Most savers will lose some flexibility and be pushed to invest rather than save in cash, while older savers will be kept protected. Even though this policy aims to encourage economic investment, it also increases the risk for some households.

Increase in Dividend, Property & Savings Tax Rates by 2%

Taxes on dividends, property and savings will be raised by 2% points. From April 2026, the dividend tax rate will be 10.75% raised from 8.75% for basic taxpayers and 35.75% raised from 33.75% for higher taxpayers. From April 2027, the tax rate on savings and property will also be enhanced by 2 points. 22% raised from 20% for basic taxpayers, 42% raised from 40% for higher taxpayers and 47% raised from 45% for additional. These changes will incur £1.2bn per year from dividend taxes, and £0.5bn each from savings and property income per year.

Impact

By this, investors, landlords and people with significant savings will pay more tax and receive lower returns. On the other hand, the government will receive extra revenue to support public services.

Freezing Tax Threshold

Income tax and National Insurance thresholds will be frozen until 2031. So even if taxes are not increased, as wages rise, more people may pay higher taxes over time due to fiscal drag. 

Impact

Even without increasing direct tax, freezing the tax threshold will push workers to pay more taxes over the years. For nearly a decade, 780,000 more people will pay more tax, and it will increase the tax burden on many workers.

Minimum Wage Rise

By April 2026, the National Living Wage will be increased. Workers of age 21 and over will earn £12.71 per hour, resulting in a pay rise to about 2.7 million people. 18-20-year-olds will earn £10.85 an hour, and under 18s and apprentices will earn £8 an hour.

Impact

By this implication, millions of workers, especially lower-paid and younger employees, will see a meaningful boost in their hourly pay.

Two Child Benefit Cap

The two-child benefit cap will be removed, which costs £3bn by 2029-30. It will enhance the benefit for 560,000 families by an average value of £5310. It will be implemented from April 2026 and is aimed at reducing child poverty and giving an equal chance to every child.

Impact

By removing the two-child cap, over half a million families can enjoy major financial relief, and it will also be helpful in reducing child poverty.

Salary Sacrifice Scheme

From 2029, salary sacrifice contributions will be capped at  £2,000 with any excess taxed like normal employee pension contributions.

Impact

Due to this implementation, higher earners will lose some tax advantages, as the contribution above this £2,000 limit will be taxed normally. It will impact the tax savings for richer employees, but it will increase government revenue.

Increase in Gambling Taxes

This budget raises the Remote Gambling Duty from 21% to 40% and online betting duty from 15% to 25%. It is also eliminating the Bingo Duty from 2026 and projecting to generate £1bn per year by 2031. While in-person gambling and horse racing taxes remain the same.

Impact

Online Gambling firms may face higher taxes due to steep increases in remote gambling duty and online betting duty, while bingo operators can benefit from the relief of Bingo Duty.

Mansion Tax

By the New Mansion Tax, property owners will be charged £2,500 on homes worth more than £2 million and £7,500 on homes worth more than £5 million. This tax is expected to raise £400m by 2031, targeting less than 1% of homes.

Impact

This policy affects less than 1% of the most expensive properties, while £2,500 – £7,500 will be added per year, depending on property value. It is expected to raise £400m by 2031, increasing costs for ultra-rich home owners, while it will leave the vast majority of property owners unaffected.

Electric Vehicle Tax

A new EV excise duty of 3p per mile for electric cars and 1.5p for plug-in hybrids will be implemented, which will fund the doubled road maintenance in England and £200m for charging points that will create a fairer system alongside fuel duty.

Impact

This excise duty will enhance the driving cost for EV owners, but it is also advantageous for road maintenance and charge points.

Writing Down Allowances for Businesses Challenges

Writing Down Allowance rate (WDA) rate has been reduced to 14% from 18% by April 2026, and a new 40% first-year allowance will also be provided from January 2026. 

Impact

Firms get a large upfront tax break on new investments, but tax relief will be slower in upcoming years due to reduced WDA.

Lower taxes on Retail and Leisure Businesses

Business rates will be permanently reduced for more than 750,000 retail, hospitality and leisure properties. This will be funded by higher business rates on the largest 1% of properties with rateable values of £500,000 and above

Impact

Over 750,000 retail, hospitality and leisure properties will benefit from permanent lower tax rates. This move is funded by higher taxes on around 1% of high-value properties that shift the burden to wealthy property owners.

Cost of Living Reduction

Cost-of-living will be tackled by extending the bus fare cap, freezing rail fares and prescription charges, extending the 5p fuel duty cut and raising minimum wages. The Eco Energy Scheme will be scrapped to cut down £150 from an average household energy bill starting from April 2026.

Impact

This budget tried to cut down the cost-of-living via frozen prices and lower bills. It tries to balance the debt reduction, public service improvement and household support without resorting to austerity or reckless borrowing.