Our Budget breakdown

On 26 November, we heard from the Chancellor, Rachel Reeves, outlining the government’s 2025 Budget. There was a lot in the speech that could affect your money. We've taken a closer look and picked out some of the most important changes that may be relevant to you.

The information on this page is an overview only and does not cover all announcements made in the Budget.

Income and employment

Income Tax and National Insurance thresholds will remain at current levels for a further 3 years until April 2031.

The minimum wage will increase from April 2026, rising to £12.71 an hour for over-21s, £10.85 an hour for 18 to 20-year-olds, and £8.00 an hour for under-18s and apprentices.

Income and employment

Income Tax and National Insurance thresholds will remain at current levels for a further 3 years until April 2031.

The minimum wage will increase from April 2026, rising to £12.71 an hour for over-21s, £10.85 an hour for 18 to 20-year-olds, and £8.00 an hour for under-18s and apprentices.

Savings and Investments

The Individual Savings Account (ISA) system is being reformed. From April 2027, the overall ISA allowance each tax year remains at £20,000.

For under 65s the amount you can pay into a cash ISA is being reduced to £12,000, for over 65s this stays at £20,000. This means someone who is under 65 could choose to put £20,000 into a Stocks and Shares ISA, or up to £12,000 into a cash ISA and the remainder into a Stocks and Shares ISA.

Rates of Income Tax applicable to savings income are changing. From April 2027, the savings basic rate will be increased by 2% to 22%, the savings higher rate will be increased by 2% to 42% and the savings additional rate will be increased by 2% to 47%.

Rates of Income Tax applicable to dividend income are changing. From April 2026, the basic rate will be increased by 2% to 10.75% and the higher rate will be increased by 2% to 35.75%. The additional rate will remain unchanged at 39.35%. 

Savings and Investments

The Individual Savings Account (ISA) system is being reformed. From April 2027, the overall ISA allowance each tax year remains at £20,000.

For under 65s the amount you can pay into a cash ISA is being reduced to £12,000, for over 65s this stays at £20,000. This means someone who is under 65 could choose to put £20,000 into a Stocks and Shares ISA, or up to £12,000 into a cash ISA and the remainder into a Stocks and Shares ISA.

Rates of Income Tax applicable to savings income are changing. From April 2027, the savings basic rate will be increased by 2% to 22%, the savings higher rate will be increased by 2% to 42% and the savings additional rate will be increased by 2% to 47%.

Rates of Income Tax applicable to dividend income are changing. From April 2026, the basic rate will be increased by 2% to 10.75% and the higher rate will be increased by 2% to 35.75%. The additional rate will remain unchanged at 39.35%. 

Pensions

Salary sacrifice rules for pension contributions are changing. From April 2029, pension contributions above £2,000 a year made via salary sacrifice will be subject to National Insurance Contributions (NICs) for both employers and employees.

The State Pension will rise in April 2026 by 4.8% in line with average wages.

Pensions

Salary sacrifice rules for pension contributions are changing. From April 2029, pension contributions above £2,000 a year made via salary sacrifice will be subject to National Insurance Contributions (NICs) for both employers and employees.

The State Pension will rise in April 2026 by 4.8% in line with average wages.

Inheritance

Inheritance Tax thresholds are staying the same for a further year, until April 2031.

This is alongside previously announced plans to bring unused pension funds and death benefits into the Inheritance Tax liability, with the change due to take effect in April 2027.

Inheritance

Inheritance Tax thresholds are staying the same for a further year, until April 2031.

This is alongside previously announced plans to bring unused pension funds and death benefits into the Inheritance Tax liability, with the change due to take effect in April 2027.

Homes and property

A new High Value Council Tax Surcharge on owners of residential properties valued at over £2 million in England is being introduced from April 2028. The levy will be an annual £2,500 charge, rising to £7,500 for properties worth more than £5 million.

Separate tax rates for property income (affecting landlords) are being created. From April 2027, the property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%. These rates will apply across England, Wales and Northern Ireland. 

Homes and property

A new High Value Council Tax Surcharge on owners of residential properties valued at over £2 million in England is being introduced from April 2028. The levy will be an annual £2,500 charge, rising to £7,500 for properties worth more than £5 million.

Separate tax rates for property income (affecting landlords) are being created. From April 2027, the property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%. These rates will apply across England, Wales and Northern Ireland. 

Spending and tax

A new Electric Vehicle Excise Duty is being introduced at 3p a mile for battery electric cars and 1.5p a mile for plug-in hybrids from April 2028.

Fuel duty will be frozen at its current discounted rate until September 2026. From then, the current discount of 5p will be gradually reversed in stages up until March 2027.

Regulated rail fares will remain unchanged until March 2027 in England.

The government will increase all rates of Air Passenger Duty in line with the Retail Prices Index (RPI) from April 2027.

Motability scheme tax reliefs are being reformed from July 2026.

NHS prescriptions in England will stay at the same level of £9.90.

Student Loan Plan 2 repayment threshold will freeze for 3 years from April 2027.

Spending and tax

A new Electric Vehicle Excise Duty is being introduced at 3p a mile for battery electric cars and 1.5p a mile for plug-in hybrids from April 2028.

Fuel duty will be frozen at its current discounted rate until September 2026. From then, the current discount of 5p will be gradually reversed in stages up until March 2027.

Regulated rail fares will remain unchanged until March 2027 in England.

The government will increase all rates of Air Passenger Duty in line with the Retail Prices Index (RPI) from April 2027.

Motability scheme tax reliefs are being reformed from July 2026.

NHS prescriptions in England will stay at the same level of £9.90.

Student Loan Plan 2 repayment threshold will freeze for 3 years from April 2027.

Benefits

The 2-child benefit cap, which currently applies to those receiving means-tested benefits, is being lifted from April 2026.

Young people aged 18 to 21 claiming Universal Credit who have been out of work or education for 18 months will be offered a guaranteed paid work placement.

Benefits

The 2-child benefit cap, which currently applies to those receiving means-tested benefits, is being lifted from April 2026.

Young people aged 18 to 21 claiming Universal Credit who have been out of work or education for 18 months will be offered a guaranteed paid work placement.

Full details of the 2025 Budget are on the government website.

 

Personal financial advice with Schroders Personal Wealth

This year's Budget could present both challenges and opportunities. By staying informed and adapting strategies, Schroders Personal Wealth could help you navigate the evolving economic landscape and optimise your financial plans. Fees apply if you take out a product or service.

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Important legal information

This page isn't personal advice and does not cover all announcements made in the Budget. If you would like to discuss any of the topics covered here, including what is the best course of action for your individual circumstances, please contact your financial adviser. If you do not have a financial adviser, you may be able to access one via our partnership with Schroders Personal Wealth (fees and eligibility criteria apply). Unbiased is a service that finds a local adviser based on your requirements. You can also find mortgage brokers, accountants, and solicitors on Unbiased.

Tax treatment depends on individual circumstances and may change in the future.

The value of investments, and the income from them, can fall as well as rise and you may get back less than you invest. Investing for 5 or more years helps reduce the impact of market changes over time.

Schroders Personal Wealth is a trading name for Scottish Widows Schroder Personal Wealth Limited.