Budget Summary November 2025

The Chancellor delivered the Autumn Budget this week — and while the rumour mill was predicting another wave of tax rises, what we actually got was a mixed bag of freezes, tweaks, and a few big changes worth knowing about.

I know Budget announcements can feel like reading a 400-page IKEA manual in the dark — so I’ve broken everything down into a clear, simple, enjoyable guide.

Here’s what’s actually changing — and what it means for you.

1. Your tax bands are frozen until 2031

• Yes, really — another 3-year freeze.
• This means as earnings rise with inflation, more people drift into higher tax brackets (called “fiscal drag”).

Impact:

Most people will pay more tax over time without any headline tax rates increasing.

2. Salary sacrifice pension contributions capped from 2029

• The first £2,000 you salary-sacrifice into your pension each year stays NIC-free.
• Above that? You and your employer start paying National Insurance.

Impact:

Still great value — but the huge NIC savings for larger sacrifices will disappear.

3. ISA shake-up (starting 2027)

• Cash ISA limit drops to £12,000 (for under-65s)
• Stocks & Shares ISA stays at £20,000
• Lifetime ISA to be replaced by a new first-time-buyer ISA (consultation coming 2026)

Impact:

Savers may move more into investments rather than cash.

4. Dividend & savings income tax going up

• From 2026/27:
• Dividend tax ↑ by 2%
• Savings tax ↑ by 2%

Impact:

ISAs become even more valuable.

Non-ISA investments become slightly less tax-efficient.

5. New “Mansion Tax” council tax surcharge

Starts 2028 in England:

• Homes £2m–£2.5m → £2,500 per year
• £2.5m–£3.5m → £3,500
• £3.5m–£5m → £5,000

6. Inheritance Tax stays frozen until 2031

Nil Rate Band and Residence Nil Rate Band remain unchanged:

• £325,000
• £175,000

Impact:

More estates drift into the IHT net — planning is more important than ever.

7. IHT on pensions coming in 2027

• Big shift: Unused pension pots & death benefits will soon fall inside your estate for IHT.

Impact:

Pensions will no longer be the “perfect” IHT shelter they once were.

Estate planning strategy may need reviewed.

8. Electric vehicles: “Pay per mile” is coming

• From 2028:
• EVs → 3p per mile
• Plug-in hybrids → 1.5p per mile

9. National Living Wage rises to £12.71 (from April 2026)

• Over 3 million workers affected.

10. Removal of the two-child benefit cap (from April 2026)

• Projected to lift 450,000 children out of poverty by 2030.

Below is a simple breakdown based on the type of client you are — feel free to read whichever section suits you best.

If You’re a Saver or Investor

• ISAs become even more important (tax on savings & dividends is rising).
• Cash savers under 65 will see their ISA allowance fall to £12,000, so planning matters.

Use it or lose it: dividend allowance (now £500) and CGT allowance (£3,000) are historically tiny — putting pressure on proper planning.

From 2029:

• Only the first £2,000 of sacrificed salary avoids NICs.
• Higher earners making large sacrifices will lose a significant benefit.

My guidance:

• We can plan a contribution strategy that optimises tax relief before the 2029 cap.

If You Own Property

• New “Mansion Tax” style surcharge if your property is over £2m (England only).
• Lettings income will have its own tax rates from 2027 (22%, 42%, 47%).

My guidance:

If you’re a landlord or own higher-value property, let’s review structure and allowances early.

If You’re Retired or Approaching Retirement

• State Pension rises by 4.8% in April 2026 (triple lock survives).
• But from 2027, the State Pension alone may exceed the tax-free allowance.
• IHT on pension pots starts in 2027 — potentially huge for legacy planning.

My guidance:

A retirement income review is essential — drawdown vs annuity vs non-pension assets now carry different implications.

If You’re a Business Owner

• VCT tax relief drops from 30% → 20% (from 2026).
• Corporation tax penalties for late filing will double.
• E-invoicing becomes mandatory in 2029.
• Salary vs dividends equation changes again due to rising dividend tax.

My guidance:

Let’s run the salary/dividend modelling again to maximise take-home pay.

11 Quick Tax Tips for 2026

1. Make sure you use your £12,570 personal allowance.
2. Use your ISA allowance every year if you can.
3. Use the £500 dividend allowance before it disappears in inflation.
4. Remember NICs are basically an extra tax — plan around them.
5. Avoid the “marginal tax traps” (some bands exceed 60%).
6. Pensions remain incredibly valuable — despite the upcoming IHT changes.
7. ISAs first, pensions second, then general investments.
8. If you’re a couple, balancing income between you can reduce tax.
9. If you own a business, review how you withdraw profit.
10. Don’t ignore CGT planning — small allowances matter now.
11. Electric company cars remain very tax-efficient.

Final Thoughts

This Autumn Budget wasn’t dramatic — but it quietly increases the tax burden for millions over time.

Frozen thresholds + rising taxes on savings + new rules on pensions and IHT = a perfect storm that rewards proactive financial planning.

Want to review your plan?

If you’d like me to walk through how these changes impact your tax, income, investments or retirement strategy, just get in touch:

Warm Regards,
Alex
0141 345 2015