On Wednesday 26 November, Chancellor Rachel Reeves delivered her second Autumn Budget 2025. It was presented as a step towards a fairer and more sustainable tax system that can fund public services and support families, while keeping the public finances on track. The overall package of tax rises and spending changes is expected to cost in the region of £26 million.
Rather than increasing the main income tax and national insurance rates, the Chancellor has chosen to freeze key thresholds for longer. In addition, more revenue will be raised from dividends, savings income and property income over the coming years.
Below are the key headlines we think individuals and businesses should be aware of. Each of these areas will be explored in more detail in separate blogs.
Income tax thresholds and allowances
- The personal allowance and the main income tax thresholds will remain frozen at their current cash values for a further three years, up to and including the 2030/31 tax year.
- Over time, this means more income is likely to fall into higher tax bands as earnings rise.
As a result, more taxpayers may find themselves paying higher rates even if their circumstances do not feel very different.
Tax on savings, dividends and property income
- From the 2026/27 tax year, tax rates on savings income, dividend income and property income will rise by 2 percentage points.
- The additional rate on dividends will stay at 39.35%.
- These changes shift more of the tax burden onto investment and rental income rather than earned income.
This will be especially important for company directors taking dividends, landlords and anyone with significant investment income.
Fuel duty and motoring costs
- Fuel duty will increase in three stages:
- 1p per litre on 1 September 2026
- A further 2p per litre on 1 December 2026
- A final 2p per litre on 1 March 2027
- From April 2028, a new usage-based Electric Vehicle Excise Duty (eVED) will be introduced, charging per mile driven.
- Typical electric vehicle drivers are expected to pay around £240 per year initially, with a reduced rate for plug-in hybrids.
Taken together, these changes mean that motoring costs are likely to increase gradually over the next few years.
Business rates and property taxes
- From 1 April 2026, permanently lower business rates multipliers will apply to eligible retail, hospitality and leisure properties with rateable values below £500,000.
- Higher-value business properties above this threshold will face a new, higher multiplier.
- From April 2028, a High-Value Council Tax Surcharge will apply to residential properties valued at £2 million or above.
- The surcharge will be charged in addition to existing council tax and will be payable by the property owner.
Consequently, some businesses and property owners will see their costs fall, while others will see them rise.
Pensions and salary sacrifice
- From 6 April 2029, the NIC advantage on pension contributions made through salary sacrifice will be capped at £2,000 per year.
- Contributions above this level under salary sacrifice arrangements will no longer benefit from the current National Insurance treatment.
This change will be particularly relevant for higher earners who currently use salary sacrifice as part of their pension planning.
ISAs and investment rules
- The overall annual ISA allowance will remain at £20,000.
- From April 2027, savers under age 65 must invest at least £8,000 of their ISA subscription in qualifying investments such as shares and authorised funds.
- Under this rule, it will no longer be possible for under-65s to hold the full £20,000 allowance entirely in cash.
Therefore, younger savers will need to think more carefully about their investment mix inside ISAs.
Welfare and family support
- The existing two-child limit for Universal Credit will be abolished.
- Families with more than two children will no longer see their Universal Credit entitlement restricted purely because of family size.
This is expected to increase support for many larger households.
For a detailed breakdown of the Budget’s key components, you can view the full document here.
If you’d like to talk through how these changes might affect your personal finances or your business, please get in touch with the AMMU team. We’re here to help you understand the numbers and plan ahead with confidence.