Today, the Autumn Budget 2025 briefly appeared on the Office for Budget Responsibility (OBR) website nearly an hour before the Chancellor delivered the official statement. Because the leak gave taxpayers an unexpected early preview, the following breakdown highlights the key changes and explains what they mean for both individuals and businesses.
Income Tax and National Insurance
Threshold freeze: The government will freeze income tax and national insurance thresholds for another three years from 2028. As wages rise, more workers will move into higher tax bands, which will steadily increase tax bills through so-called “fiscal drag.”
Rates unchanged: Despite this, the basic rates of income tax, VAT, and national insurance will remain the same.
Property, Dividend, and Savings Taxes
Moving on to investment-related income, the government will raise basic and higher rates on property income, dividends, and savings income by 2 percentage points each.
Pensions
From 2029, the government will introduce a £2,000 cap on salary-sacrifice pension contributions. Any amount above this threshold will be taxed in the same way as standard employee pension contributions, effectively reducing the benefit of larger salary-sacrifice arrangements.
State Pensioners
From 6 April 2027, pensioners whose only income is the basic or new State Pension will no longer need to pay tax via simple assessment, even when their pension exceeds the personal allowance.
ISAs
Although the overall ISA allowance will stay at £20,000, the rules will shift from 6 April 2027. The annual cash ISA limit will drop to £12,000, meaning savers must invest at least £8,000 of the total allowance into stocks and shares. Notably, these changes will not affect savers over 65.
Wages
Wage policy will also shift. The National Minimum Wage for 18–20-year-olds will rise from £10 to £10.85, while the Living Wage will increase from £12.21 to £12.71.
Fuel and Electric Vehicles
Turning to transport, fuel duty will remain frozen until at least September 2026—continuing a 15-year freeze—before eventually rising with inflation. Additionally, a new electric vehicle excise duty will apply at 3p per mile for EVs and 1.5p per mile for plug-in hybrids, on top of existing vehicle duty.
Mansion Tax / High-Value Council Tax Surcharge
From April 2028, homeowners with properties valued at over £2 million will face a new surcharge on top of standard council tax:
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£2m–£2.5m: £2,500
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£5m+: £7,500
This measure effectively creates a tiered “Mansion Tax” linked directly to property value.
Inheritance Tax
From 6 April 2026, spouses and civil partners will be able to transfer any unused 100% agricultural or business property relief between them. This change also applies where one spouse died before that date, marking a significant shift from the previously announced policy.
Capital Allowances
Finally, The main rate writing-down allowance will be reduced from 18% to 14% from April 2026 and a new 40% first-year allowance will be introduced from 1 January 2026
Need Help Navigating the New Rules?
As these changes take shape, individuals and businesses alike will need to reassess their tax planning, savings strategies and long-term financial goals. Although the full impact will vary from person to person, understanding how each measure interacts with your specific circumstances will be essential. Our team can help you navigate the updated rules, identify opportunities to stay tax-efficient, and ensure you remain compliant while making the most of the allowances still available. If you’d like tailored guidance, we’re here to support you through every step of the transition.