The details of the Autumn Budget 2025 have been announced by Chancellor Rachel Reeves. Continuing with Labour’s pledge to restore the economy, the Budget aims to cut NHS waiting lists, cut debt and borrowing and cut the cost of living.
There is currently a large fiscal hole of about £20bn, according to the Office for Budget Responsibility (OBR). Inflation remains sticky at 3.6% and interest rates are elevated, both of which increase pressure for households and businesses. Rachel Reeves has stated that the UK needs strong foundations of economic stability, which is safeguarded by iron-clad fiscal rules.
Here, we’ve detailed the changes to be made following the release of the Autumn Budget.
National Minimum Wage
In April 2026, the National Minimum Wage for those aged over 21 will increase by 50p per hour to £12.71. For those aged between 18 and 20, it will increase by 85p to £10.85. For those aged under 18 and apprentices, the minimum wage will increase from £7.55 to £8.
Income tax
The freeze on income tax is to be extended beyond the original April 2028 deadline for an additional 3 years. This will take the freeze to 2030–31.
National Insurance
There will be no increase in National Insurance contributions, with a freeze on National Insurance thresholds confirmed. This has been put in place for another 3 years from 2028.
Dividends, property and savings income
The basic and higher rates of tax are to be increased on dividends, property and savings income by 2%. This will raise funds of £2.1bn.
Council tax
A council tax surcharge, also called the mansion tax, is to be set for high-value homes in England. The tax will apply to properties worth more than £2m, imposing an annual charge of £2,500. This will increase to £7,500 for properties worth more than £5m. The measure is expected to raise £400m in 2029–30.
Stamp duty
Newly listed firms in the UK will benefit from 3 years of stamp duty exemption. This is to encourage more businesses to have a London IPO.
Milkshake tax
The existing sugar tax will now be applied to bottles and cartons of milk-based drinks. These include milkshakes, lattes, milk substitute drinks and flavoured milk.
ISA reform
To tackle the low rates of retail investment, the tax-free amounts that can be saved in Individual Savings Accounts (ISAs) will change. From April 2027, the allowance of £20,000 will be retained but £8,000 of this must be used exclusively for investment in stocks and shares. Those aged over 65 will retain their full cash allowance.
Business taxes
Entrepreneurial investment schemes will be expanded and a tax relief applied for UK stock market listings, as mentioned earlier.
There will be a 40% first-year allowance that enables businesses to write off a higher amount of their upfront investment costs.
Business rates will be permanently lowered for 750,000 retail, hospitality and leisure businesses. This will be due to higher rates imposed on properties that are worth more than £500,000.
In a bid to prevent online retailers from undercutting those on the high street, customs duty will be imposed on parcels of all values.
Capital gains tax
The 100% relief on capital gains tax on businesses sold to employee ownership trusts is to be cut to 50%. This measure is to cut the high cost of the scheme.
Electric vehicles
Drivers are to be taxed according to how much they drive rather than the type of car they drive. Therefore, a new tax on electric vehicles (EVs) is to be charged. This could help make up for the fall in fuel duty as more drivers move away from petrol and diesel cars. Therefore, from April 2028, electric and plug-in hybrid cars will be subject to a mileage-based charge.
Drivers of electric cars will be charged 3p per mile, while drivers of plug-in hybrids will be charged 1.5p per mile. This will help to double funds for road maintenance and should eventually raise about £1.9bn a year.
Tobacco and alcohol duties
Alcohol duty will rise in line with inflation, while tobacco duty will rise at an extra 2% above the retail prices index (RPI) measure of inflation.
Gambling taxes
To reform the rise in online gambling, remote gambling duty for online casinos will increase from 21% to 40%. This will raise more than £1bn by 2031. The 10% duty on bingo is to be abolished. There will be no change to in-person gambling or horse racing.
Youth employment
Paid placements will be given to young people who have been out of work for 18 months. This is in a bid to help them find employment.
Pensions
The state pension will increase by £440 per year. An increase of more than £550 per year will apply from April for anyone receiving the new state pension’s full rate. This is due to the triple lock, which enables the state pension to increase by the highest figure from either average earnings growth, 2.5% or inflation.
A yearly cap of £2,000 will be put in place from April 2029 for the amount that can be paid into pensions without paying National Insurance. If this cap is exceeded, National Insurance payments must be made on those contributions by both employees and employers.
Mineworkers will have access to reserves in their pension funds. This will be achieved by transferring the British coal fund’s investment reserve to its members, ensuring they get a fair deal in their retirement.
Welfare system
More checks are to be carried out to prevent fraudulent welfare claims.
Funding has been provided to make training for under-25s completely free for small and medium-sized enterprises.
Motability scheme
This scheme was created to help those with disabilities but, instead, has led to the subsidising of luxury car leases. Therefore, luxury vehicles are to be removed from the scheme.
Inheritance tax
All compensation payments relating to the infected blood scandal will be exempt from inheritance tax.
The new £1m inheritance tax allowance to apply from April will now be transferable between spouses.
Education
£5m will be allocated to school libraries so that all primary schools in England have access to a library. £18m will also be allocated to improve and upgrade playgrounds.
Health
£4.9bn is to be spent on more GP appointments and nurses, along with £300m of investment in technology to improve patient services. As well as that, 250 new local health centres are to be created.
Defence
Savings are to be reinvested back into national security to maintain the UK’s commitment to defence.
A report on the nuclear industry is being published and details of how it is to be implemented will be published within 3 months.
Child poverty
To cut child poverty, the two-child benefit cap will be removed. This was originally put in place to encourage smaller families and to cut the benefits bill but, instead, it increased child poverty. As such, the cap will be abolished from April. Doing so will also eliminate the rape clause, which is a policy exemption for this cap.
Energy bills
The energy company obligation (ECO) scheme is to be scrapped. This will reduce the average household bill by £150 next year.
Fuel duty
An extension of the 5p cut in fuel duty is to be granted until September 2026. After that, it will increase with inflation following 15 years of frozen rates.
Regional investment
Funds of £14bn are to be devolved to seven mayors for investment in infrastructure, business support and skills. Initiatives are to be put in place for Cornwall, Peterborough, Leeds and Darlington.
Grants are to be given to Wales, Northern Ireland and Scotland. These include £505m for the Welsh government, £820m for the Scottish government and £370m for the Northern Ireland Executive.
Wales is to host two investment zones, including AI growth zones. In Anglesey, the UK’s first modular nuclear reactors are being built.
In Scotland, £14m is to be invested in low-carbon technologies, £20m to redevelop Kirkcaldy town centre and seafront and £20m to renew Inverclyde’s infrastructure.
Investment will be made into the Lower Thames Crossing and other infrastructure projects, such as Northern Powerhouse Rail.
Get expert mortgage and protection advice following the Autumn Budget 2025
If you have any concerns as to how the Autumn Budget 2025 announcements may have affected your mortgage or protection policies, give us a call on 01322 907 000. Our brokers are here to discuss any queries you have and find the right solution for your financial needs.