The recent Autumn Budget (delivered November 26, 2025) introduced significant changes affecting a wide range of taxpayers. The Chancellor, Rachel Reeves, aimed to balance public finances through a mix of tax increases on wealth, property, and passive income, while offering relief to families and pensioners.
Here is a summary of the key points for taxpayers, categorized by how they may affect you.
1. Income Tax & National Insurance (The “Stealth” Tax)
- Threshold Freeze Extended to 2031: The freeze on Income Tax and National Insurance thresholds—originally set to end in 2028—has been extended for another three years until April 2031.
- Impact: As your wages rise with inflation, you will likely be dragged into higher tax bands (fiscal drag), effectively increasing the amount of tax you pay without the headline rates changing.
- Salary Sacrifice Cap (from April 2029): A new cap of £2,000 per year will be placed on the amount of pension contributions you can make via salary sacrifice that is exempt from National Insurance.
- Impact: Any salary sacrifice contributions above £2,000 will be subject to National Insurance, reducing the tax efficiency of this popular pension saving method for employees.
2. Savings & Investments
- Cash ISA Limit Cut (Under 65s): From April 2027, the annual Cash ISA allowance will be reduced from £20,000 to £12,000 for people aged under 65.
- Exception: Over-65s retain the full £20,000 allowance.
- Note: The limit for Stocks & Shares ISAs remains unchanged, and the overall ISA limit remains £20,000. This is designed to “nudge” younger savers into investing rather than holding cash.
- Dividend Tax Hike: From April 2026, dividend tax rates will increase by 2 percentage points.
- New Rates: Basic rate rises to 10.75%; Higher rate to 35.75%.
- Savings Tax Hike: From April 2027, the tax rate on savings interest (outside of an ISA) will also rise by roughly 2 percentage points.
- New Rates: Basic rate taxpayers will pay 22% (up from 20%), and higher rate payers will pay 42% (up from 40%).
3. Property & Homeowners
- “Mansion Tax” (High Value Council Tax Surcharge): From April 2028, a new annual levy will apply to residential properties valued over £2 million.
- Cost: £2,500/year for homes worth £2m–£5m; £7,500/year for homes worth over £5m.
- Landlord Tax Increase: From April 2027, the income tax rate on property income (rent) will increase by 2 percentage points (to 22% for basic rate, 42% for higher rate).
- Stamp Duty: No new immediate changes were announced, meaning the temporary threshold increases are still set to expire in March 2025 as previously planned.
4. Families & Benefits
- Two-Child Benefit Cap Scrapped: In a major policy reversal, the “two-child limit” on Universal Credit and Child Tax Credits has been lifted. This means families can now claim benefits for third and subsequent children born after April 2017.
- Energy Bills: Green levies will be removed from domestic energy bills from April 2026, which is expected to lower average bills by approximately £150/year.
5. Motoring & Travel
- EV “Pay-Per-Mile” Tax: From 2030, Electric Vehicles (EVs) will be subject to a new usage tax of 3p per mile.
- Fuel Duty Frozen: The temporary 5p cut in fuel duty has been extended for another year, avoiding a planned increase at the pumps.
- Rail Fares: Regulated rail fares will be frozen for next year.
Summary Table: Winners vs. Losers
| Likely Winners | Likely Losers |
| Pensioners (Over 65s): Keep full £20k Cash ISA allowance. | Savers (Under 65): Cash ISA cap cut to £12k. |
| Large Families: Two-child benefit cap lifted. | Investors & Business Owners: Higher dividend taxes. |
| Drivers: Fuel duty freeze extended. | Landlords: Higher tax on rental income. |
| Energy Bill Payers: £150 cut via green levy removal. | High-Value Homeowners: New “Mansion Tax” on £2m+ homes. |
Immediate Next Step
If you are under 65 and have significant cash savings, you may want to maximize your Cash ISA contributions (up to the current £20,000 limit) over the next two tax years before the limit drops to £12,000 in April 2027.