Autumn Budget 2025: Key changes that could affect your finances

Rachel Reeves’ second Budget as Chancellor began in dramatic style, with the Office for Budget Responsibility accidentally releasing its forecasts half an hour early.

The headline news was that Britain's tax burden is climbing to unprecedented levels, with the Chancellor maintaining these increases are both fair and kept to a minimum. But what does that actually mean for you and your financial planning?

Below is a summary of the most significant announcements and what they could mean depending on where you are in your financial life.

For those building wealth

Cash ISA allowance reduced

The government plans to cut the annual limit for cash ISAs from £20,000 to £12,000 - the remaining £8,000 can be invested in Stocks and Shares ISAs with a focus on UK businesses. However, over 65s will still be able to use the full £20,000 in Cash ISA savings.

Salary sacrifice arrangements face new restrictions

From April 2029, pension contributions made through salary sacrifice will attract National Insurance Contributions on amounts exceeding £2,000. This represents a fundamental change for anyone using this tax-efficient route to boost retirement savings.

Dividends and income tax freeze

Dividend tax increases by 2 percentage points from April 2026, affecting anyone receiving dividend income regardless of their tax bracket.

Meanwhile, personal income tax thresholds remain frozen until at least 2030/31. Combined with rising wages, this ‘fiscal drag’ will push many into higher tax brackets without any real increase in purchasing power.

Scottish residents should note that while these UK-wide threshold freezes apply, devolved income tax settings mean your position may differ.

Mansion tax

A new annual charge applies to properties valued above £2 million. The so-called 'high value council tax surcharge' will cost £2,500 annually for homes worth £2-5 million, rising to £7,500 for properties exceeding £5 million.

For those nearing retirement

Pension access remains stable

No alterations to pension lump-sum allowances or withdrawal rules, meaning existing retirement income strategies remain valid for now.

State Pension increase

The ‘triple lock’ survives another Budget. From April, the state pension rises 4.8% to approximately £241.30 weekly, or £12,547.60 annually.

Changes for expats

Anyone considering retiring abroad should take note: voluntary Class 2 National Insurance contributions will no longer be available for those retiring abroad.

Inheritance Tax considerations

The £325,000 IHT threshold remains frozen, and business asset reliefs continue under review. The previously announced inclusion of pensions within estates from 2027 also stands.

If you have business assets or a complex estate, now might be the time to revisit your planning.

For business owners and employers

Rising employment costs

The national living wage increases to £12.71, while the minimum wage for 18-20 year-olds rises to £10.85. These increases will impact payroll costs, particularly for smaller businesses operating on tight margins.

Employer NIC changes on pensions

The removal of National Insurance exemptions for salary-sacrifice pension contributions above £2,000 means employers will face higher NIC bills when contributing to staff pensions. This may reshape how companies structure their benefits packages.

Capital Gains relief reduced

Business owners previously benefited from 100% Capital Gains Tax relief when selling their companies. The Chancellor has halved this to 50%, arguing the previous arrangement allowed gains to escape taxation entirely.

Corporation tax rates hold steady

Corporate tax rates remain frozen, and new businesses can now claim a 40% first-year allowance, helping offset early capital investments.

What to consider now

Most changes won't take effect immediately, giving you time to plan carefully rather than react quickly. But there are some sensible steps worth considering:

Review your pension contribution strategy, particularly if you use salary sacrifice for amounts above £2,000. You may want to maximise contributions before the NIC exemption disappears.

If you're a cash ISA saver, assess whether the reduced allowance still serves your needs, or whether moving towards stocks and shares ISAs or pensions makes more sense.

Business owners should revisit renumeration, estate and succession planning, especially given the changes to dividend tax, IHT treatment and employer NICs.

As always, the impact of these changes depends entirely on your personal circumstances.  I’ll cover these with you at your next financial planning meeting, but if you'd like to discuss any of this sooner, please do get in touch.