Autumn Budget 2025: What It Means for Your Finances

The Autumn Budget has just been announced, and we’ve been keeping a close eye so you don’t have to.

We know financial news can feel confusing (and sometimes a bit overwhelming), so we’ve pulled together the key points that actually matter for your personal finances.

Below, you’ll find the important updates that might affect your savings, pensions, mortgages, and long-term plans. We’ve also included clear next steps if you’re unsure what this means for you.

 As always, if you want to chat things through, we’re here.

Key Headlines at a Glance

• Pensions: Cap on pension salary sacrifice from 2029, but no change to the tax-free cash limits.

• ISA Allowances: Cash ISA tax-free allowance will drop to £12,000 in 2027. Over-65s retain the full £20,000. No changes to Stocks and Shares ISA limits.

• State Pension: Set to rise by 4.8% from April 2026

• Income Tax: Tax bands frozen for an additional three years.

• Other Taxes: Dividend tax increased by 2% from April 2026. No changes to Capital Gains Tax. 

• ‘Mansion Tax’: £2,500 on properties worth over £2m; £7,500 for properties over £5m

ISAs

What was announced:

The Cash ISA limit will reduce from £20,000 to £12,000 a year from April 2027. Over-65s will retain the full £20,000 allowance. 

What this means for you:

If you’re under 65, you’ll have less tax-free space each year to shelter cash savings. If you rely on ISAs as part of your savings strategy, you may need to adjust how and where you save, especially for medium-term goals such as home deposits, emergency funds, or planned spending.

Things to consider:

• Prioritise your ISA contributions before 2027 while the allowance is still at £20,000.

• Review whether a Stocks & Shares ISA is more suitable, especially if you’re saving for 3+ years, as that allowance isn’t affected.

• Don’t forget the personal savings allowance, especially if you’re a higher earner and likely to exceed it. Cash held outside ISAs may now be exposed to tax sooner.

Pensions

What was announced:

The state pension will rise by 4.8% in April 2026. Weekly payments increase to £241.30, or £12,547.60 per year.

What this means for you:

This is a welcome boost for retirees, but it still won’t replace the need for personal retirement planning. The full state pension remains a foundation, not a full income.

Things to consider:

• Check your State Pension forecast on gov.uk.

• Review your private pension contributions.

• Factor this increase into your retirement planning.

No changes to the Tax Free Cash Amounts – lots of people were concerned about this, but it didn’t materialise.

Salary Sacrifice Pension Cap

What was announced:

From 2029, a £2,000 monthly cap on salary sacrifice will apply. Anything above this will be subject to National Insurance.

What this means for you:

Earners using salary sacrifice will pay more national insurance for anything over £2,000 sacrificed per year. It does not appear that using salary sacrifice will affect the ability to reduce your salary tax efficiently; it will just cost you a little more to do so.

Things to consider:

• Review your salary sacrifice arrangement.

• Check employer matching or enhanced contributions.

• Do the sums on how much this may cost.

• Don’t panic, this is not set to come in until 2029, but start planning now.

Income Tax 

What was announced:

Tax thresholds will remain frozen for another three years.

What this means for you:

A “stealth tax” effect – you may pay more tax even if your income doesn’t rise significantly due to fiscal drag.

Things to consider:

• Review your tax position each year.

• Make use of pensions, ISAs, and charitable allowances.

• Business owners should review how they extract profit.

Property & Mortgages 

What was announced:

From 2028, a new mansion tax applies annually to properties over £2m (£2,500) and over £5m (£7,500).

What this means for you:

Most households won’t be affected. High-value homeowners may need to plan for the new annual charge.

 Things to consider:

• Check the updated valuation of your home.

• Consider how this may influence selling or buying decisions.

• Factor the annual charge into affordability calculations.

There were no announcements regarding changes to wider council taxes, which had been mooted.

Increased tax rates for income earned from property, an increase of 2%, is it time to reconsider property as part of your investment strategy?

Mileage-Based Electric Car Tax

What was announced:

Electric car drivers will be subject to a mileage-based charge on battery electric and plug-in hybrid cars from April 2028.

What this means for you:

It was confirmed that the mileage-based charge will equal 3p per mile for battery electric cars and 1.5p per mile for hybrid cars between the 2028 and 2029 financial year. Electric vans, trucks and motorcycles will initially be exempt from the charge. 

Things to consider:

• Drivers may be expected to self-report their mileage by estimating the distance they will travel each year 

• Mileage will be checked annually, either via existing MOT tests or for new cars through an annual check procedure which could be carried out at MOT stations. 

What Happens Next?

• If something in the Budget has raised a concern.
• If any of these changes affect your savings or long-term plans.
• If you’re unsure what the changes mean for your situation.

We’re here to help. Whether you’re planning for retirement, reviewing investments, or simply wanting reassurance that you’re still on the right track, just get in touch for personalised guidance.