Autumn Budget 2025

Written By Adam Sketchley

After months of speculation and rumour, the widely anticipated Budget was delivered by Chancellor Rachel Reeves on 26th November 2025. In this era of social media, we are constantly bombarded by news, misinformation, recycled AI content and often a distorted context. So without any political bias, this update intends to present the facts and what you need to know.

To help set the scene, last year, in her maiden Budget, the Chancellor sought to balance the public finances with tax rises to cover a reported £22 billion black hole. This year, Reeves faced an even more difficult landscape. In response, she announced an estimated £26 billion of further tax rises by 2029/30.

Key Takeaways

Income Tax

  • Income tax thresholds frozen until 2031

  • Higher-rate income tax threshold to remain at £50,270

  • Personal allowance to remain at £12,570

Pensions

  • Salary sacrifice capped: From April 2029, pension contributions made via salary sacrifice will only receive National Insurance relief on the first £2,000. Above this, NI will apply (income tax relief still applies).

  • Tax-free cash: No changes. The 25% tax-free lump sum and the £268,275 cap remain untouched.

  • Annual allowance: Remains at £60,000.

Business Owners

Dividend tax rates rise by +2% from 1 April 2026:

  • Basic rate: 8.75% → 10.75%

  • Higher rate: 33.75% → 35.75%

  • Additional rate: unchanged at 39.35%

Property

  • A new ‘mansion tax’: Properties £2 million–£2.5 million to face an additional council-tax levy of up to £2,500 a year from 2028

  • Properties above £5 million: levy rises to £7,500

  • Inheritance Tax nil-rate band frozen until 2031

Savings & Investments

  • Savings and property income tax (interest and rental income above allowances) to increase by +2% for all bands from April 2027.

  • Annual ISA allowances remain: Stocks & Shares ISA: £20,000 JISA: £9,000 Lifetime ISA: £4,000 (but see below)

  • Cash ISAs will have a reduced annual allowance of £12,000 for those under 65, from April 2027.

  • Lifetime ISA to be scrapped, pending consultation early next year.

  • Upfront relief on Venture Capital Trusts reduced from 30% to 20% from next year. Annual investment limit increased to £10 million.

  • Capital Gains Tax: No changes to rates or the £3,000 annual exemption.

Other Announcements

  • Fuel duty frozen until September 2026

  • Electric vehicles to incur a 3p per mile road charge from 2028

  • Two-child benefit cap scrapped from April 2026

  • National Minimum Wage increases from 1 April 2026: Ages 21+: £12.21 → £12.71 (+4.1%, around £900 a year for full-time staff) Ages 18–20: £10.00 → £10.85 (+8.5%, around £1,500 a year full-time) Ages 16–17 and apprentices: £7.55 → £8.00 (+6%)

Summary

This Budget leaves the UK with the highest tax burden in modern history, with no reduction in welfare spending. Although much of the recent discussion has centred on “economic growth”, the reality is that with a reported £22 billion hole in the public finances, this was never likely to be a growth-orientated Budget.

There has been plenty of negativity since the announcement, yet many of the more extreme pre-Budget rumours have proved wide of the mark. Yes, the continued freezing of income-tax thresholds is an effective tax rise, and business owners face higher dividend taxes from April 2026. But concerns about changes to pension freedoms and tax-free cash did not materialise, which is welcome news.

It is also worth noting that many of the fiscal adjustments are scheduled for future years. In practice, this pushes the more meaningful decisions into the future, giving the government time to assess the economic backdrop and potentially revisit certain measures.

As a client of Reybridge Capital, you can be confident that we will work closely with you to review and adjust your financial plan as needed to reflect the changes announced in the Budget. Your plan is designed to evolve as life, markets and legislation change, and we will continue to guide you through each step to ensure your long-term goals remain on track.

RISK WARNING

The content of this document is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any arrangement.

Adam Sketchley
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