2025 Budget

Autumn Budget 2025

After months of speculation, the Autumn Budget delivered on 26 November was less dramatic than many expected. Nonetheless, there were still plenty of announcements that, depending on your circumstances, may have an impact on you. Here are our main takeaways.

Changes

• Cash ISAs: From April 2027, the annual cash ISA limit will fall to £12,000 for those under 65. The overall ISA limit remains £20,000, so investors could split £12,000 into a cash ISA and £8,000 into a stocks and shares ISA. For those aged 65 and over, the cash ISA limit stays at £20,000. There is no change to the stocks & shares ISA and the full £20,000 can still be paid in each year.

• Dividend tax: From April 2026, dividend tax rates will rise by 2% for basic and higher‑rate taxpayers. This affects individuals earning more than £500 per year in dividends – for example, those with relatively large Investment Accounts (excluding ISAs and pensions, which remain exempt).

• Savings income tax: From April 2027, tax on savings interest will increase by 2%. This relates to tax paid on savings interest (with an allowance of £1,000 for basic rate taxpayers and £500 for higher rate). As Scotland sets its own income tax rates, details for Scottish residents will be confirmed in the January budget.

• State pension: From April 2026, the state pension will rise by 4.8%, equivalent to £570 per year for those receiving the full pension.

Frozen thresholds

• Income tax and National Insurance bands: Frozen until at least 2031.
• Inheritance Tax thresholds: Also frozen until at least 2031.

The effect of these freezes is that, as incomes and asset values grow, more people will gradually move into higher tax bands or face inheritance tax liabilities.

Other headlines

• Pension salary sacrifice: From April 2029, National Insurance relief on pension salary sacrifice will be capped at £2,000. This does not apply to the Teachers’ Pension Scheme, but other employees should check with their employers.

• Mansion tax: From April 2028, an annual levy will apply to homes valued above £2 million in England. This does not apply to Scotland.

• Minimum wage: From April 2026, the minimum wage for workers aged 21 and over will rise to £12.71 per hour.

This content is for general information only and does not constitute advice. This information is based on our current understanding of taxation, legislation and regulations. Any levels quoted and reliefs from taxation are subject to change. Tax implications will be based on your individual circumstances.