The Chancellor, Rachel Reeves delivered her Autumn Budget 2025 to a packed house of Commons, and an anxious country, on Wednesday 26th November starting at 12.30 pm.
Even before the Chancellor had sat down, commentators were examining the assumptions, forecasts, policies and pronouncements behind her plans to re-energise the country.
At Continuum, we focus on understanding the true impact of the budget on your finances and your family’s well-being.
At Continuum we understand these changes may affect different people in different ways, so it’s important to understand how they relate to your own circumstances.
While the headlines can feel overwhelming, the key point is what this means for your day-to-day finances.
What was behind the budget?
The government faces challenges. UK growth has slowed reducing tax revenues, forcing the Chancellor to look for new revenue streams.
There is still a major treasury shortfall – the £20–25bn “black hole” to fill. The government also needs to find extra billions to meet its commitments around rebuilding the NHS, boosting defence, building new homes and encouraging investments.
The Chancellor has had to balance raising revenue with supporting market confidence, household finances and economic growth. She also needs to secure the support of her own back benchers, and – importantly – the UK electorate.
So how exactly is she going to do it?
Advance warning?
The Chancellor began unveiling measures even before the official Budget announcement. Confirmed changes include a 4.1% rise in the minimum wage from April 2026, along with adjustments to the sugar tax, which will make milkshakes more expensive from January 2028
But it wasn’t the only early news. The Office for Budget Responsibility published its latest economic and fiscal outlook early, and in error. The news for taxpayers wasn’t good. Rachel Reeves would raise taxes by £26bn, and the tax burden will hit a new all-time high of 38.3% of GDP by 2031.
This was countered by the prediction of higher growth. According to the OBR GDP is forecast to grow this year by 1.5%, up from the 1% predicted previously.
As a result of the leak, markets reacted to the budget even before it was revealed.
But it was not until Ms Reeves stood up in the House of Commons on Wednesday that the major announcements were made.
What was in the budget announcement?
In her preamble, the Chancellor started her aim as creating a fairer, stronger and more secure Britain. As part of this approach, the plans include an increase in taxes amounting to £26bn by 2029-30.
Fortunately, this will not mean increases in income tax – but there are increased rates to be wary of elsewhere.
Income tax
Britain’s biggest tax has been on the Chancellor’s mind, judging by the rumours circulating earlier in the month.
But any rate increase would be a breach of Labour’s manifesto pledges. The solution seems to be more stealth tax, extending the threshold freeze that’s been in place since 2021 until 2030/31. Freezes to the thresholds at which the basic and higher rates of income tax begin to apply are alone expected to raise £39 billion a year in 2029-30, and, as wages rise, the number of people paying higher-rate tax is expected to jump from four million to more than 10 million.
Frozen thresholds mean more people will gradually drift into higher tax brackets, even if their pay hasn’t increased significantly.”
These changes reinforce the importance of planning ahead to keep your tax position as efficient as possible.
Driving
There will be a new mileage tax for electric vehicles from April 2028. In 2028-29, the charge will equal £0.03 per mile for battery electric cars and £0.015 per mile for plug-in hybrid cars, with the rate per mile increasing annually with CPI, and paid on top of tax.
Going electric will become more expensive. However, there will be a freeze to fuel duty for a further five months, followed by staged increases from 2026, bring in £2.4bn next year and £0.9bn each year afterwards.
There will be curbs on Motability allowance, designed to prevent claimants buying luxury cars – but search and rescue vehicles will be exempt from road tax.
Benefits
The two-child benefit cap “within universal credit” is being lifted from April 2026. Its removal costs £2.3 billion in 2026-27 and £3.0 billion in 2029-30.
Pensions
Pension pots are safe – but pension saving is affected, and workers, rather than those who are already retired, could be paying more tax.
This is because of a ceiling on salary sacrifice pension contributions above £2,000 will face National Insurance from April 2029. This means that salary-sacrificed pension contributions above £2,000 will be treated as ordinary employee pension contributions in the tax system. Around 5 million basic rate taxpayers currently benefit from salary sacrifice schemes for their pension contributions. A cap could bring many of them into a higher rate.
Employees would still get income tax relief on their pension contributions, but it could reduce pension saving incentives.
The Chancellor also confirmed that the triple lock remains safe.
ISAs
The £20,000 annual allowance will be retained – but £8,000 will be ringfenced for investment in Stocks and Shares ISAs with a focus on UK businesses.
Over 65s will still be able to use the full £20,000 in Cash ISA savings.
Property, savings and dividends
The tax rates on dividends, property and savings income will be increased by 2 percentage points in basic and higher rate tax to deliver an additional £2.1bn. Landlords, investors and savers will all be paying more.
Home tax
There will be a new tax on houses worth more than £2m. Levied annually at £2,500 for properties worth more than £2m and £7,500 for properties worth more than £5m.
The ‘Mansion Tax’ will officially be called a high value council tax surcharge on properties worth over £2 million, raising £0.4 billion.
Householders
Millions of households will save an average £150 on their energy bills next year by removing the energy company obligation – which adds around £43 to the average bill and easing the renewables obligation which currently adds around £90 to the average annual gas and electricity bills.
Retail business owners
The government will introduce “permanently lower tax rates” for more than 750,000 retail, hospitality and leisure properties. The move will be funded through higher rates on properties worth £500,000 or more, such as warehouses used by online retail giants.
Welfare
Reversals to the government’s previously announced cuts to winter fuel payments and health-related benefits will cost £7bn in 2029-30. Along with the removal of the two-child benefit cap the OBR estimates this will increase benefits for 560,000 families by an average of £5,310. The move will lift hundreds of thousands of children out of poverty.
Sickness and disability benefit spending will increase by £109bn.
Winners and losers
Winners
Minimum wage workers. There will be increases to the minimum tariffs.
Unemployed young people
Reeves has confirmed that young people have been out of work for 18 months will be given paid placements to find employment.
Welfare claimants
Reversals to the government’s previously announced cuts to winter fuel payments and health-related and the removal of the two-child benefit cap will offer a lifeline for hard-pressed families.
Children
There will be more money for schools and particularly school libraries, and support for playgrounds.
Losers
Employees
Employees will not face increases in tax rates, but a combination of steady inflation and frozen tax thresholds will mean that the numbers paying higher rate tax will steadily increase.
Landlords
2% will be added to the tax bills of landlords.
Smoker and drinkers
There will be increase to duty. The Chancellor will continue with the planned uprating for tobacco duties that she set out last year and uprate alcohol duties by inflation, along with her plans to introduce a vaping products duty in 2026.
Gamblers
Remote gaming duty will increase from 21% to 40% – although bingo duty will be abolished.
What happens now?
Rachel Reeves sat down at 1:40 pm. The Prime Minister had praised Rachel Reeves, his Chancellor, for achieving “balance, stability and fairness” and said that it will drive down the cost of living.
The government has kept its pre-election promise by avoiding any increases to National Insurance contributions, income tax, or VAT. However, through fiscal measures often described as ‘stealth taxes,’ the Chancellor has managed to boost revenues indirectly.
But the budget doesn’t quite end there – in the coming days MPs will debate elements of the plans before the bill is introduced to Parliament. The leader of the opposition condemned the budget as increasing tax on savers, pensioner investors, workers and drivers while increasing welfare and damaging the economy.
What should you do?
Financial markets were calm ahead of the Budget. In recent days the cost of government borrowing has edged lower and the pound edged higher which suggests markets are hopeful that the chancellor’s tax and spending plans will retain a credible grip on the level of government debt over the coming few years.
The FTSE 100 index of the UK’s biggest listed companies went from positive to negative territory but soon made up any losses – suggesting that markets are broadly positive about the content of the budget.
After weeks of rumours, the budget actually seems less dramatic than many feared, but every change in taxation and allowances needs to be factored into your financial plans. Understanding the changes, and particularly how they will impact your own tax position is now urgent.
- If you are using salary sacrifice to boost your pension while keeping your tax under control, taking a fresh look at your arrangements is essential.
- One million more workers will pay a higher rate of income tax with thresholds frozen for another three years. If you are close to a tax band limit, you may need to look at new ways to reduce your tax labilities.
- If you are using an ISA to build your wealth, you need to understand the effect of the changes to the ISA allowance, and consider taking a fresh look at your ISA strategy.
- If you are an investor, you need to look closely at your portfolio. Some sectors, such as gambling will be adversely affected by the budget, while it is possible that retailers will present new opportunities.
- If you have property investments, your tax position will change. The increase in tax and the renters right act could take revenues to a cliff edge. Disposing of properties or restructuring to hold property through a limited company may now be essential.
- Speculation about the changes to the housing market may have put the brakes on buying and selling. News that there will be no changes to stamp duty or a sales tax could mean a boost for home sales. Getting an appropriate mortgage, to take advantage of new opportunities could be a priority for you.
Whatever your financial plans, the budget will affect many of them. For an expert view on all the aspects of the budget as they affect you, call us at Continuum, to work out a personal budget of your own.
Budget 2025 live updates: Rachel Reeves to outline tax and spending changes – BBC News
UK Budget’s pensions tax raid to raise over £3bn
Home – Office for Budget Responsibility
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice and you should seek independent financial advice before embarking on any course of action.
The Financial Conduct Authority does not regulate taxation advice.
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