The Autumn Budget 2025 summary was delivered on 26 November by the Chancellor, Rachel Reeves, outlining a series of measures designed to raise £36 billion in revenue over the coming years.
After months of speculation and budget rumours, the OBR released, in a rather unprecedented move, the fiscal forecasts an hour earlier than the Chancellor’s speech. This confirmed several anticipated changes, while also revealing that some of the bigger rumours would not materialise.
Notably, there were no reforms to tax-free cash on pensions, pension tax relief or Inheritance Tax gifting rules, despite heavy speculation in the run-up to the announcement. The main rates of income tax and National Insurance also remain unchanged.
Below is our clear, simple Autumn Budget 2025 summary of the key points that may affect your financial future.
Summary of the Autumn Budget 2025: Key measures at a glance
- ISA changes: From April 2027, the Cash ISA limit for under-65s will reduce to £12,000. The overall £20,000 allowance remains, meaning the remaining £8,000 must be invested. Over-65s can still use the full £20,000 however they wish. Limits on Lifetime ISAs and Junior ISAs remain unchanged until 2031, and a new simpler ISA will replace the Lifetime ISA in future.
- Dividend, savings and rental tax: From April 2026, dividend tax rates for basic and higher-rate bands will rise by 2%, while the additional-rate dividend tax remains unchanged. Savings and rental income tax rates will increase by 2% from April 2027.
- Salary sacrifice: National Insurance savings on salary-sacrificed pension contributions will be capped at £2,000 per year from April 2029.
- Income tax: The personal allowance and income tax thresholds will remain frozen until 2031, pulling more people into higher tax bands over time.
What this means for you
Most of the changes have long lead-in times, which gives plenty of opportunity to plan ahead, particularly around tax-efficient investing, retirement income planning and savings strategies. Below we break down each measure, including what the changes could mean for your financial plan, providing a clear summary of the Autumn Budget 2025.
1. ISA rule changes
From April 2027, the Cash ISA limit for those under 65 will fall to £12,000. The overall ISA allowance remains £20,000, meaning the remaining £8,000 must be placed in an Investment ISA.
Over-65s are unaffected and can continue using the full allowance in cash or investments. Junior ISA and Lifetime ISA rules remain unchanged until 2031, although the Government plans to replace the Lifetime ISA with a simpler product.
What this means for you
If you’re under 65 and cash savings play an important part in your plan, think about using the full allowance before the rules change. Cash-like funds inside an Investment ISA may be a suitable alternative to consider.
For a broader look at how ISAs have evolved and why they remain one of the most powerful tax-efficient saving tools, read our guide: ISAs: 25 years of tax-free savings.
2. Dividend tax to rise
From April 2026, dividend tax rates will increase by 2% for the basic and higher-rate bands. The additional-rate will remain unchanged. This means dividends will be taxed at 10.75%, 35.75% and 39.35%, depending on your income band.
What this means for you
If you rely on dividends, whether from a business or an investment portfolio, more of your return will be taken in tax. Using tax-efficient wrappers such as ISAs and pensions becomes even more important.
If you’re a business owner, consider bringing forward any planned dividends before the end of the current tax year. It may also be worth reviewing your company structure and shareholdings to increase flexibility in how dividends are distributed in future.
3. Savings tax to go up
From April 2027, tax on savings income (such as bank interest) will increase by 2 percentage points across all tax bands. This means savings income will be taxed at 22%, 42% and 47%, depending on your income level.
These higher rates will also apply to chargeable event gains on investment bonds, as these are treated as savings income. The starting rate for savings (£5,000) and the Personal Savings Allowance (£1,000 for basic-rate taxpayers / £500 for higher-rate taxpayers) remain unchanged.
What this means for you
As more of your savings interest will be taken in tax, it becomes even more important to hold cash and investments in tax-efficient wrappers, such as ISAs or pensions.
If you hold investment bonds, there may be opportunities to manage taxable gains more efficiently by taking withdrawals within unused allowances.
Our guide to the hidden cost of holding cash explains why keeping too much in cash can reduce your long-term returns, especially as tax rises.
4. Property income tax to rise
From April 2027, property income will also be subject to the higher tax rates of 22%, 42% and 47%, bringing it in line with the increases to savings income.
What this means for you
If you own rental property, this change will reduce the income you retain after tax. It may be worth reviewing whether properties are best held personally or through a company, and ensuring income is structured as efficiently as possible.
Where appropriate, holding property in the name of the spouse or partner with the lower income can help maximise personal tax-free allowances.
5. Salary sacrifice pension contributions
Salary sacrifice remains a tax-efficient way to save into a pension. However, from April 2029, the National Insurance savings on salary-sacrificed contributions will be capped at £2,000 per year. Both employees and employers will pay NI on any salary sacrificed above this amount.
What this means for you
If you use salary sacrifice to boost your pension, consider maximising contributions before the NI benefits reduce. The change may have a greater impact on employees earning around the higher-rate threshold, particularly where employers currently share NI savings by increasing pension contributions.
Salary sacrifice may still be worthwhile for some people — for example, to retain Child Benefit or tax-free childcare. If you want to understand the wider tax relief available on pension contributions, you may find our guide on how to claim higher-rate tax relief on pensions helpful.
6. Income tax threshold freeze
The personal allowance and higher/additional rate thresholds will remain frozen until 2031. Although tax rates have not changed, more people will gradually be pulled into higher bands as wages and costs rise.
What this means for you
This makes annual tax planning essential, especially for business owners and those with flexible retirement income. Pension contributions, VCTs, EIS and Gift Aid charitable donations can all help manage your income tax bill, either by extending your basic-rate band, reducing adjusted net income or reclaiming higher-rate tax relief.
7. FSCS protection increase
Although not part of the Budget, the FSCS protection limit for bank savings will rise from £85,000 to £120,000 per person, per bank from 1 December 2025.
What this means for you
This gives savers more flexibility to consolidate accounts without breaching protection limits.
8. Inheritance tax bands frozen
The Nil Rate Band and Residence Nil Rate Band, together worth up to £500,000 per person, will remain frozen for another five years.
As property values and personal wealth rise while thresholds stay static, more estates are expected to fall into the IHT net. Some families may also find their eligibility for the Residence Nil Rate Band tapered away.
What this means for you
It’s a good time to review your legacy and estate plans to ensure they remain efficient. This may include:
- gifting (where affordable)
- using reliefs such as Business or Agricultural Property Relief
- structuring investments appropriately
- considering life insurance to cover potential liabilities
A personalised plan can help ensure your wealth is passed on effectively and tax-efficiently.
9. High-value council tax surcharge (“Mansion Tax”)
From April 2028, properties in England worth over £2 million will face a new annual surcharge, starting at £2,500 and rising to £7,500 for homes valued above £5 million. This will sit on top of normal council tax.
The Valuation Office will assess which properties fall within scope and will carry out revaluations every five years. The Government will consult in early 2026 on how the rules should apply to more complex ownership structures, including companies, trusts and partnerships.
What this means for you
If you own a property worth more than £2 million, it’s important to factor this additional annual charge into your long-term plans from 2028 onwards.
10. VCT and EIS rule changes
From April 2026, VCTs and EIS will be able to invest in larger, scaling businesses. However, income tax relief on VCTs will fall from 30% to 20%.
What this means for you
If VCTs are already part of your planning, acting before the end of this tax year may secure the higher relief. Some investors may also wish to revisit these options after the rule changes.
Our final thoughts
Most of the measures announced in the Autumn Budget have long lead-in times, which gives plenty of opportunity to plan ahead. The key areas likely to have the biggest impact over the coming years include:
- Dividend tax increases from April 2026
- Savings and rental income tax rises from April 2027
- ISA changes for under-65s from 2027
- Salary sacrifice NI benefits being capped from 2029
- Income tax thresholds frozen until 2031
While these changes mean some people will pay more tax on investment income, savings and property, there are still many effective ways to stay tax-efficient and keep your financial plans on track.
At Balance: Wealth Planning, we’ll be helping clients understand how these measures may affect their cashflow, investments and long-term goals. If you’re already a client, your Financial Planner will cover these points within the next few weeks and as part of your next review.
Autumn Budget 2025 – Frequently Asked Questions
Will the Autumn Budget 2025 affect my pension?
Salary sacrifice NI benefits will reduce from 2029, but pension tax relief and tax-free cash remain unchanged.
How will ISA changes affect me?
Under-65s will see the Cash ISA allowance reduced to £12,000 from 2027. The remaining allowance must be invested.
What’s happening to income tax?
Personal allowance and tax thresholds will remain frozen until 2031, which means more people will gradually move into higher tax bands.
Are landlords affected?
Yes. From 2027, rental income will be taxed at higher rates of 22%, 42% and 47%.
Who will feel the biggest impact of the Budget?
Business owners, higher-rate taxpayers, investors with General Investment Accounts, landlords, and anyone relying on dividends or savings income.
Speak to a financial planner in Nottingham or Lincoln
If you live in Nottingham, Lincoln or the surrounding areas and would like clarity on how the Budget affects your retirement plans, investments or tax strategy, our team is here to help you explore your options.
Explore how we can support you:
Financial Adviser Nottingham
Financial Adviser Lincolnshire
Sources:
FSCS £120,000 Protection Update
Chancellor’s Autumn Budget 2025 Speech
