The 2025 Autumn Budget headlines explained What's changing and why it matters...

In addition, whilst not mentioned in the Budget address but rather supporting documentation, the government has confirmed further updates to the inheritance tax rules on pensions, building on measures first introduced in the 2024 Autumn Budget. From April 2027, personal representatives (PRs) will be able to instruct pension scheme administrators to withhold up to 50% of taxable benefits for up to 15 months to cover inheritance tax (IHT). PRs will also be discharged from liability for any IHT discovered after receiving clearance from HMRC. These changes aim to provide clarity and flexibility, although they may add complexity and delay payments.[3]

ISAs

One of the most discussed rumours ahead of the 2025 Autumn Budget was a cut to ISA allowances. Whilst changes have been announced, they are less severe than initially speculated.

• Cash ISA annual allowance reduced to £12,000 for those under 65 from April 2027.
• Total ISA annual allowance of £20,000 remains unchanged.
• This change is intended to encourage savers who reach the £12,000 cash ISA limit to allocate the remainder of their allowance into stocks and shares ISAs available.
• The government will consult on scrapping the Lifetime ISA in early 2026. This product is expected to be replaced with a new ISA aimed at first-time buyers following the consultation.

Income tax and allowances

One of the more significant stealth tax measures announced is the extension of the income tax rate freeze for three more years, now running until April 2031. This move is expected to raise £7.6 billion in revenue and will increase the impact of fiscal drag, where more taxpayers are drawn into higher rates because thresholds do not adjust with inflation.[4]

• The Personal Allowance and income tax rates remain unchanged, but the rate freeze was extended for three more years from 2028 to April 2031.
• From April 2026, dividend tax rates will increase by 2 percentage points for basic and higher-rate taxpayers (to 10.75% and 35.75% respectively). The additional rate will not change.
• From April 2027, savings income tax rates will increase by 2 percentage points for basic, higher and additional-rate taxpayers (to 22%, 42%, and 47% respectively).
• From April 2027, property income tax rates will increase by 2 percentage points for basic, higher and additional-rate taxpayers (to 22%, 42%, and 47% respectively).
• Income tax relief on Venture Capital Trusts is to be reduced from 30% to 20% from April 2026.[5]

Capital Gains Tax (CGT) and Inheritance Tax

• No change to CGT main rates or annual exemptions.
• Business Asset Disposal Relief (BADR) unchanged.
• The agricultural and business relief allowance becomes transferable between spouses from April 2026, bringing it in line with other inheritance tax policies.
• The £325,000 nil-rate band and residence nil-rate band remain unchanged but have been frozen a further year until 2031.

Property and council tax

The much-discussed “mansion tax” has materialised in the form of an additional council tax surcharge for high-value homes.

• From 2028, an annual council tax surcharge will apply to high-value properties. Four new bands will be introduced with charges ranging from £2,500 for a property valued in the £2 million – £2.5 million range, up to £7,500 for a property in the highest value band of £5 million or more.
• This surcharge is in addition to the standard council tax band charge.

Other measures

• No changes to Stamp Duty Land Tax or the pension triple lock.
• Employer National Insurance threshold freeze extended to 2031.

Thoughts and reactions

Despite the heightened anticipation, gilt markets, which were closely monitored ahead of the Budget, reacted with relative calm. Even with the OBR’s early release, movements were muted, with an initial dip in bond yields reversing fairly quickly. As we saw last year, any substantial impact often takes time to materialise, so we’ll continue to keep an eye on longer term trends.

In the run-up to the 2025 Autumn Budget, speculation about changes to pension tax-free cash resurfaced, echoing last year’s concerns.[6] Those fears contributed to a surge in withdrawals from UK pensions in 2024–25, up almost 62%, as many acted on rumours rather than facts. [7]  This year, similar anxieties emerged, with many individuals questioning whether they should take benefits early. The key takeaway is clear, whilst it’s often easier said than done, decisions should never be driven by fear or hearsay. Working with a financial adviser can help ensure that choices are based on sound planning rather than reactive moves that could compromise your future retirement.

What does the 2025 Autumn Budget mean for you?

For most individuals, this Budget does not bring alarming changes. Many of the headlines have not come to pass, and the government has largely balanced the books through future tax rises rather than immediate shocks. In short, the Chancellor avoided any big gambles, although she did surprise us with a small win for Bingo enthusiasts by scrapping Bingo Duty… who had that on their 2025 Budget Bingo card?

So, whilst Bingo halls across Britain may be celebrating, the broader picture remains steady. However, remember that this government still has three more Autumn Budget announcements to go. As always, future announcements could bring more changes, so staying informed and prepared is essential.

We’ll share a more in-depth analysis of the Budget in due course, but please do reach out to a financial adviser if there is anything that you’re concerned about.