How the 2025 Autumn Budget will Affect Your Taxes and Money

Chancellor Rachel Reeves delivered the Labour party’s second Budget Announcement on Wednesday 26^th November 2025. While she pledged last year not to raise taxes for “working people”, this year tells a very different story. Reeves has stated she is now asking “everybody to make a contribution”. The changes announced will certainly have everybody feeling the impact and with that in mind, our accountants have summarised the top 10 key changes that will affect you from April 2026 onwards:

1. Income tax threshold freeze extended once again

The personal allowance as well as income tax thresholds remain frozen for a further 3 years. The £12,570 personal allowance is the amount a UK taxpayer can earn without incurring income tax (this is removed for anyone earning £125,140 a year) and has been set at this amount since 2021. It was due to remain frozen until 2028 but the Chancellor has now extended the freeze until 2031. This would mean that unless changes arise, this would be the longest sustained freeze on the main income-tax thresholds in modern UK history. Frozen income tax thresholds result in an increase in tax collection for the government through fiscal drag. As salaries and inflation rises, more people are “dragged” into paying more taxes. This is why it’s also known as “stealth tax”. Make no mistake, this does mean that we will all be paying more taxes come April 2026.

2. Increase to minimum wage

From April 2026 the minimum wage for over 21s will rise to £12.71 from £12.21, for workers aged 18 – 20 their pay will rise to £10.85 up from £10.00, and under 18’s wages and apprentices will receive a pay increase to £8 per hour up from £7.55. This only goes to support the point that with the frozen income tax thresholds; more people will be paying more taxes come next year. Not only this but the continued strain on businesses – many still reeling from the last budget’s National Insurance (NI) increase – could mean a freeze in recruitment and less jobs.

3. Increase in tax for limited company directors and investors

Most limited company directors will pay themselves a combination of both a salary and dividends, however those in receipt of dividends (therefore including investors who are not company directors) will face a 2% increase in taxes. Dividends remain taxed lower than other income but from April the new rates will be 10.75% for basic rate income taxpayers (up from 8.75%) and 35.75% for higher rate income taxpayers (up from 33.75%). The additional rate of 39.35% for additional rate taxpayers remains the same so arguably no tax increase for the wealthiest.u:

4. Increase in tax for landlords

From April 2026 Landlords will face a perfect storm. Not only is the next phase of Making Tax Digital to begin, affecting landlords directly by requiring them to submit 5 tax returns a year, but further compliance measures will be imposed when the Renters’ Rights Act 2025 comes into force 1 May 2026. Day to day administration, management, and costs will undoubtedly become more challenging and time-consuming. Add to this a 2% increase on rental income from April 2027 which Reeves has just announced in this Budget could prompt landlords to sell up. However, a shrinking rental supply only results in increased competition which pushes rents to rise. This combination of higher taxes and increased regulatory burdens is shaping up to make the next couple of years tough for both landlords and tenants, with tenants likely facing reduced disposable income.

5. Tax raid to hit savers

Very few people will escape a 2% tax increase as the Chancellor announces that savings income will too be impacted by the tax rise. This means that basic rate taxpayers will pay 22% on savings income, higher rate taxpayers will pay 42% and additional rate taxpayers will pay 47% on money earned through a savings account. The only respite to this is that it is not due to start until April 2027 allowing savers to seek out alternative solutions to make the most out of their money. However, it doesn’t stop there. Reeves also announced reforms to ISAs and has slashed the amount that under 65’s can pay into a cash ISA by £8,000 (currently the maximum amount you can pay into a cash ISA is £20,000). Her aim is to encourage people to invest into stocks and shares ISAs instead to stimulate the economy. Those over 65 of age can continue to pay up to £20,000.

6. Cuts to pension contributions made through salary sacrifice

Many employers rely on salary sacrifice schemes in order to be able to recruit the necessary people and skills needed to support their businesses, but there will now be restrictions imposed on pension contributions made through these schemes. Previously the only limit when it came to sacrificing salary for pension contributions was the annual limit of £60,000 or the full amount of salary until at least minimum wage was still being paid to the employee. However, with the new change coming into place from April 2029, only £2,000 of salary can be sacrificed  for pension contributions any excess over this amount will be subject  to employers and employees NI. The Chancellor claims that this targets the highest earners whilst still allows low to middle earner make full use of salary sacrifice schemes for their pension contributions. 

7. State pension restricted to those working abroad

The state pension will become harder to access for people working abroad. From April 2026, individuals living outside the UK will no longer be able to make Class 2 voluntary National Insurance contributions, which currently allow them to top up their state pension. This change will primarily affect self-employed UK nationals, expatriates, and those spending extended periods working overseas. The removal of the ability to pay Class 2 voluntary National Insurance contributions coincides with broader changes in UK tax rules, including the abolishment of non-dom tax status. This means that UK nationals living and working abroad will now have their worldwide income subject to UK tax, whilst also having less options to make voluntary National Insurance contributions to bolster their future state pension if they plan to return. They remain eligible to make voluntary Class 3 NI contributions, but this is 5 times more costly than Class 2.

8. Electric vehicle motorists to be stung with new tax

Since April 2025, electric vehicles have been required to pay road tax for the first time. From April 2028, a new mileage-based tax will be introduced, affecting both electric and hybrid vehicles. Electric cars will be charged 3p per mile, while plug-in hybrid (PHEV) cars will pay 1.5p per mile. This measure is intended to help offset the decline in fuel duty revenues caused by the rise of EVs. Under the new system, a motorist driving 10,000 miles per year in an electric vehicle would face an additional £300 annually, while a PHEV driver covering the same distance would pay £150. According to the Office for Budget Responsibility (OBR), this mileage-based tax is estimated to be roughly half the level of fuel duty currently paid by petrol and diesel drivers, ensuring all road users contribute fairly to the maintenance of the UK’s transport infrastructure.

9. New mansion tax to target the rich

Many of our clients in Oxfordshire live in high-value homes and from April 2028 onwards will start to face a new annual council tax surcharge. This surcharge applies to residential properties in England valued over £2 million and is in addition to the standard council tax rates, covering main residences, second homes, and rental properties. Under current plans, homes valued between £2 million – £2.5 million will face an additional bill of £2,500 on top of their standard council tax, homes valued between £2.5 million – £3.5 million will be charged £3,500, homes valued between £3.5 million – £5 million will be charged £5,000, and homes over £5 million will be charged £7,500. This new “mansion tax” could be particularly challenging for business owners, retired clients, or investors whose wealth is tied up in property rather than cash as meeting this additional tax liability could create cash flow pressure. Clients may need to reconsider how they fund the surcharge, for example by using rental income, liquidating other investments, or reviewing property holdings.

10. Cuts to Venture Capital Trust tax relief

While Chancellor Reeves has emphasised a desire to revive the UK economy by boosting investment, she has simultaneously announced cuts to Venture Capital Trust (VCT), a move that appears contradictory. High-net-worth individuals who have already maximised their ISA and pension allowances often rely on tax-efficient investments made through VCT to make their money work harder. From April 2026, income tax relief on VCT investments will fall from 30% to 20%, reducing the immediate incentive for investors. This change is particularly concerning for scale-up companies. Historical precedent shows the impact: when EIS relief dropped from 40% to 30% in 2006, fundraising fell by nearly two-thirds. The reduction in investor tax relief is likely to dampen enthusiasm for investing, potentially slowing the flow of capital to growing UK businesses at a critical time.

Get advice from an accountant

Our team in both Oxford and Henley are on hand to provide further guidance and support on how these tax changes may impact you. Please use our online contact form to book a consultation to discuss your concerns or goals.

What did they announce in previous Budgets?

Here you can find our archive of past Budget announcements:

• 2024 Spring Budget
• 2023 Spring Budget
• 2022 Mini Budget
• 2021 Autumn Budget

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