What does the Autumn Budget Statement 2025 mean for your finances? The Chancellor of the Exchequer, Rachel Reeves, delivered Labour’s second budget on Wednesday, 26 November. The chancellor’s opening remarks were somewhat overshadowed by the Office for Budget Responsibility’s (OBR) assessment of her budget’s effects, which was accidentally published early due to an unprecedented error.
“We are rebuilding our economy,” she said, pointing to trade deals with the US, India, and the EU, planning reforms, overhauling the visa system, and changing fiscal rules to increase public investment to a four-decade high. “Working people demanded and deserved change,” she said. “I said there would be no return to austerity and I meant it … I said I would cut the cost of living and I meant it … I said I would cut debt and borrowing and I meant it.”
Here's your simplified breakdown of the announcement:
Economy
- Office for Budget Responsibility (OBR) predicts the UK economy will grow by 1.5% this year, upgraded from a 1% forecast in March
- Inflation is predicted to average 3.5% this year, before falling to 2.5% next year, and returning to the government’s 2% target in 2027
- Borrowing in 2025/26 is predicted to be £138.3bn, falling to £112.1bn the year after, then £98.5bn in 2027/28, £86.9bn, £67.9bn in 2028/29 and £67.2bn in 2030/31
- UK to cut debt, with the government finances reaching a surplus of £3.9bn in 2029, £21.7bn the year after and £24.6bn the year after that
Taxation
- Basic rates of income tax, VAT, and national insurance will remain unchanged
- National insurance (NI) and income tax thresholds frozen for a further three years beyond 2028, gradually moving more people into higher bands over time
- Basic and higher income tax rates on property, savings and dividend income to increase by two percentage points
- Dividend tax rates will rise by two percentage points from April 2026, with the basic dividend tax rate increasing from 8.75% to 10.75%, and the higher rate going up from 33.75% to 35.75%
- The amount that under-65s can contribute to Cash ISAs (Individual Savings Accounts) will be limited to £12,000 annually from April 2027, with the remaining £8,000 of the £20,000 annual allowance allocated for investments
- The government will publish a consultation in early 2026 on implementing a new, simpler ISA product to support first-time buyers in buying a home
Wages, benefits and pensions
- The cap limiting households on universal or child tax credit from receiving payments for a third or subsequent child is to be abolished from April 2026
- Legal minimum wage for over-21s to rise 4.1% in April 2026, from £12.21 to £12.71 per hour
- Wages for 18- to 20-year-olds will increase by 8.5%, rising from £10 to £10.85 an hour, as part of a plan to create a single rate for all adults
- Basic and new state pension payments will increase by 4.8% from April 2026, exceeding the current rate of inflation, under the “triple lock” policy
- From 2029, there will be a £2,000 cap on salary-sacrifice into a pension, with contributions above that taxed in the same way as other employee pension contributions
- Removing tax benefits from salary sacrifice pension schemes is expected to generate £4.7bn, the OBR states
- The Help to Save scheme, which offers people on universal credit a bonus on savings, has been extended and expanded beyond 2027
Housing
- Residential properties in England valued above £2m from April 2028, based on the Valuation Office’s 2026 values, will face a High Value Council Tax Surcharge (HVCTS) - commonly known as a “Mansion Tax” ranging from £2,500 to £7,500 for a property valued in the highest band of £5m or more, following a revaluation of homes in bands F, G, and H
Transport
- 5p “temporary” cut in fuel duty on petrol and diesel extended again, until September 2026, before it rises again over a six-month period
- New excise duty on electric cars from 2028, payable alongside vehicle excise duty, at 3p a mile for electric cars and 1.5p for plug-in hybrids, to help double funding for road maintenance in England
- Regulated rail fares for journeys in England will be frozen next year for the first time since 1996 (although there have been times when prices increased by less than inflation)
- Premium cars will be excluded from the Motability scheme, which enables people receiving certain disability benefits to lease vehicles at a lower cost, including imposing VAT on payments for higher-value cars and ending relief from insurance premium tax
Business
- Expansion of entrepreneurial investment schemes and relief for UK stock market listings, with a three-year exemption from stamp duty
- Introduction of a 40% allowance to enable businesses to write o! more of their upfront investment costs
- Capital gains tax relief on shares sold by business owners will be halved, as the decision to restrict employee ownership trust capital gains tax relief from 100% to 50%
- Permanently reduced business rates for 750,000 retail, hospitality, and leisure businesses, funded by increased rates on properties valued over £500,000, utilised by “warehouse giants”
- Customs duty will apply to parcels of any value, to stop online retailers from undercutting high street retailers on price
- Funding will be available to ensure apprenticeships are free for small and medium-sized enterprises
Food and drink
- Tax on sugary drinks will be extended to pre-packaged milkshakes and lattes from 2028, reversing the exemption introduced when the tax was first implemented in 2018
Schools and the NHS
- As referred to in the last spending review, an additional £5m for secondary school libraries and £18m to improve playgrounds was reiterated
- The cost of a single NHS prescription in England stays at £9.90 for another year (they remain free in Wales, Scotland, and Northern Ireland)
- A saving of £4.9bn promised from a variety of efficiencies will be spent on more nurses and GP appointments, together with £300m of investment in tech to improve patient services and 250 new local patient health centres
Gambling duty
- From April 2026, the Remote Gaming Duty (RGD), levied on online casinos, will increase from 21% to 40%
- Bingo duty of 10% abolished
- New online-only rate of general betting duty, which is levied on operators’ income from sports betting
- High street bookmakers will still pay the current 15% rate, but online, the duty will increase to 25%, with an exemption for horse racing
- Casino gaming duty bands will be frozen
Devolution and regions
- English regional mayors will be granted powers to tax overnight stays in hotels and holiday lets, mirroring existing plans in Scotland and Wales
- £13bn of flexible funding for seven mayors to invest in skills, business support and infrastructure
- An additional £370m for the Northern Ireland Executive, £505m for the Welsh government and £820m for the Scottish government
- Wales will establish two “AI growth zones”, generating over 8,000 jobs, backed by a £10m investment in the semiconductor sector
- In Scotland, £14m will be allocated for low-carbon technologies in Grangemouth, £20m to renew infrastructure in Inverclyde, and £20m to revitalise Kirkcaldy town centre and seafront
