Autumn Budget 2025: Key announcements
After months of discussion, speculation and U-turns, Rachel Reeves finally unveiled her second Budget, but not before the contents had accidentally been leaked!
With a black hole getting worse and worse, structural tax measures to raise revenue were put forward, but there were also frozen thrsholds with specific time-frames, a kind of prior warning. The Chancellor abandoned the planned increase in income tax rates, which would have been the first rate rise since 1975.
The two-child benefit cap will be removed from April 2026, and welfare benefits will rise in line with inflation. This and other spending announcements will be paid for by freezing income tax thresholds, taxing pension contributions, charging electric cars per mile, a mansion tax for high end properties, a gambling tax, a tourism tax, etc, A mix of measures to add more another layer of complexity to the tax system.
Key Points
Tax thresholds frozen until 2028
Inheritance tax threshold frozen until 2030/31
CGT Business Asset Disposal Relief rate rise from 14% to 18% from April 2026
100% IHT APR/BPR capped at £1m from April 2026
Pension pots to be brought into IHT from April 2027
Payrolling of benefits in kind from April 2027
Income Tax to become digital from April 2026
Taxes
No increase in the rate of income tax, national insurance or VAT
Soft drinks levy extended to high-sugar drinks, including milk-based drinks.
Income tax thresholds frozen for a further three years beyond 2028 to 2031
Electric vehicle drivers face a 3p per mile tax from 2028/29. 1.5p per mile for hybrid cars. The charge will rise with inflation
Pensions: no change to the 25% tax-free lump sum or relief for contributions (but see salary sacrificed pensions)
Salary sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance from April 2029. Contributions above the threshold will be subject to both employer and employee NICs, 15% and 8% respectively for earnings under £50,270 and 2p on income above that level
Owners of properties worth £2m or more face a high value council tax surcharge from April 2028. Collected alongside council tax. The tax will be banded, with properties valued at £5m+ facing a £7,500 hit. The lowest band - £2m to £2.5m - will be £2,500.
From April 2027, the £20,000 ISA annual limit is kept, but £8,000 must be in investment (but over 65s not affected)
Fuel duty frozen until September 2026 followed by staged increases.
Tax on savings income will increase by 2% across all bands from April 2027.
New separate tax rates for property income, - property income will have its own individual tax rates. From April 2027, the property basic rate will be 22%, higher rate 42% and additional rate 47%.
£1m 100% ABR/BPR IHT relief (from April 2026) to be transferrable between spouses, so married farmers can hand down to their children up to £2m.
Permanently lower business rates for hospitality premises paid for by warehouses of online companies
Low value imports into the UK. The £135 or less relief to be abolished from March 2029
Tobacco, vaping and alcohol duties to rise with inflation
Bingo duty to be abolished
Student loan repayment threshold frozen at the 2026/27 level for three years
From 2027, people receiving only the basic or new state pension will not be subject to small tax bills via simple assessment