Autumn Budget 2025: major changes you need to know about

After months of speculation, the 2025 Autumn Budget is finally here. Chancellor Rachel Reeves has unveiled substantial tax rises that could reshape your finances.

A worsening economic outlook left the chancellor needing to plug a multi-billion pound black hole in the nation’s finances while sticking to previous promises not to raise income tax, national insurance, or VAT.

In response, she has opted for many smaller tax rises worth a total of £26 billion by 2029/30. These changes will have major implications for homeowners, landlords, savers, and investors.

Reeves has decided to increase the UK government’s fiscal headroom (the wiggle room it has before it breaks its fiscal rules) to £21.7 billion, with the aim of avoiding uncertainty and the need for further tax rises next year. 

Reeves said: “I’ve met my fiscal rules and built our economic resilience for the future. I have asked everyone to contribute for the security of our country.” 

We unpack what this year’s Budget means for your savings and investments.

Which taxes are rising?

We'll now explore the major tax policies announced in the Autumn Budget.

Income tax and national insurance

The deep freeze on income tax and national insurance (NI) thresholds is here to stay. 

Thresholds will be frozen for three more years until the end of the 2030/31 tax year. This policy, often dubbed a ‘stealth tax,’ will reduce workers’ take-home pay and drag more taxpayers into higher tax brackets. 

The tax freeze will raise £8.3 billion for the Treasury by 2029/30.

"I know that maintaining these thresholds is a decision that will affect working people," said Reeves.

The tax-free personal allowance of £12,570 and higher-rate threshold of £50,270 have been stuck at the same level since April 2021. In addition, the 60% tax trap, where taxpayers start losing their personal allowance once they earn over £100,000, remains in place. 

These frozen tax thresholds will make protecting your investments in an individual savings account (ISA) or pension even more attractive in the future, as more of us are dragged into higher tax bands.

Unbiased can match you with a qualified financial adviser who can help you navigate the tax changes.

Cash ISAs

The cash ISA allowance will reduce from £20,000 to £12,000 for savers aged under 65, from April 2027. 

Investors can still stash up to £20,000 in a stocks and shares ISA or can split their £20,000 allowance between cash and stocks and shares (up to £12,000 in a cash ISA, while the remainder is invested in stocks and shares).

The chancellor says this measure is aimed at encouraging more people to invest. 

She added that government figures show less than one in three cash ISA subscribers currently put more than £12,500 into a cash ISA. However, this policy will reduce the flexibility and choice available to savers and investors.

If you do want to invest more in a stocks and shares ISA, read more here about how you can invest in a way that takes into consideration your attitude to investing risk.

Salary sacrifice schemes

In a major blow to retirement savers, pension contributions under ‘salary sacrifice’ will be capped at £2,000 each tax year from April 2029. 

Contributions of over £2,000 will still benefit from income tax relief, but won’t benefit from NI savings. This measure will net the Treasury £4.7 billion in 2029/30, according to OBR forecasts.

Salary sacrifice allows taxpayers to give up part of their salary in exchange for additional pension payments, saving NI on their contributions as well as income tax. 

For a basic-rate taxpayer, a £100 pension contribution currently costs £72 under salary sacrifice, saving £20 in income tax and £8 in NI.

The new cap could cost someone currently paying £5,000 each year into their pension through salary sacrifice an extra £240 in NI payments, assuming they pay 8% NI. They would pay 8% more tax on the £3,000 they contribute over the £2,000 cap.

The good news is that there’s still time to make the most of salary sacrifice, as this measure won’t take effect for over three years.

Dividend tax

Investors who buy shares outside an ISA or pension will pay more dividend tax from April 2026, with tax on dividend income rising 2% from 8.75% to 10.75% and 33.75% to 35.75%. The dividend tax rate for additional-rate taxpayers will remain unchanged.

This means that taxpayers with £10,000 dividend income will pay an additional £190 in dividend tax, after the £500 dividend allowance.

These changes will make protecting your investments inside a stocks and shares ISA or pension even more vital.

Tax on rental income

Taxes will increase substantially for landlords, as the rates of tax on property income will rise by 2% to 22%, 42%, and 47% from April 2027, depending on your tax band. 

This tax rise will reduce profits on property investment and could make being a landlord less attractive.

Tax on savings income

Tax on savings interest held outside an ISA will rise by 2% from April 2027. 

Basic rate taxpayers will pay 22% tax, while higher-rate and additional-rate taxpayers will pay 42% and 47% respectively.

Alongside frozen tax thresholds and a reduced cash ISA allowance, this tax rate rise is a triple whammy. Not only will taxpayers pay tax on interest at a higher rate, but they are also more likely to save outside an ISA and be pushed into higher tax bands.

Thinking carefully about where to save your cash will be more important than ever.

Mansion tax

Homeowners with properties worth £2 million or more will pay a new annual ‘high value council tax charge’ from April 2028. The tax will be collected through the same system as council tax. 

There will be four bands, with homes worth £2 million charged £2,500, rising to £7,500 for homes worth over £5 million. 

This tax rise is expected to raise £400 million by 2029-30.

Other policies that could affect you

There are also a host of other tax rises that could affect you. 

Here’s a summary:

• State pension when working abroad: The state pension will become harder to access for people working abroad. From April 2026, people living abroad won’t be able to pay class 2 voluntary NI payments, which currently allows them to boost their state pension income.

• Student loans: Graduates will pay more, as the threshold and interest rate thresholds for repaying Plan 2 student loans will be frozen for three years, beginning in 2027/28, rather than falling in line with interest rates and inflation.

• Inheritance tax: Thresholds will be frozen at their current level until 2030/31.

• Fuel-duty: The current fuel-duty freeze will be extended until September 2026.

• Electric vehicles: Drivers will pay a new 3p pay-per-mile tax from 2028-29.

• Gambling: Remote gaming duty will increase to 40%.

There is some limited good news for low-earning workers and families.

• Workers: The minimum wage for over-21s will rise by 50p per hour to £12.71 from April 2026, while younger workers aged 18-20 will see the minimum wage increase to £10.85. 

• Families: The two-child benefit cap within universal credit will be lifted from April 2026. Families with more than two children will now be able to receive benefits for all their children, costing £3 billion by 2029-30, according to the OBR. 

• Household energy: The green levy will be funded via general taxation rather than being added to energy bills, reducing the direct cost to households.

• State pension: Reeves confirmed that the state pension will rise by 4.8% from April 2026, with the new state pension increasing to £12,547 per year.

Get expert financial advice 

The Autumn Budget can be overwhelming and stressful, but it’s important not to act rashly.

Whether you’re self-employed, retired, or own your own business, getting expert financial advice can help. 

Unbiased can quickly match you with a qualified financial adviser.