The Autumn Budget 2025, delivered on 26 November, introduces major changes affecting pensions, wages, taxes, benefits and public spending.
The government is raising income support for pensioners and workers
State Pension Increase
The State Pension will rise by 4.8 per cent from April 2026 under the triple lock.
Because income tax thresholds remain frozen, many pensioners may end up paying income tax for the first time.
The National Minimum Wage for those aged 21 and over will increase by 4.1 per cent to £12.71 an hour starting April 2026. Younger age brackets (18 to 20) also receive an uplift. These changes aim to protect incomes in the face of rising living costs.
The government is reshaping financial support for households
The Budget signals reforms to pension salary sacrifice schemes and tax reliefs, particularly affecting higher earners who use these methods to reduce tax.
The Budget removes the two-child limit on benefits, giving larger families access to additional financial support. This change is expected to significantly reduce hardship for low-income households with more than two children.
The Help to Save scheme will become a permanent fixture from 2028, offering a 50 per cent bonus on savings made by low-income workers.
The government is shifting more of the tax burden onto higher earners and those with significant assets
Tax thresholds remain frozen, meaning as wages increase, more people move into higher tax brackets. This is known as fiscal drag and boosts government revenue without raising headline tax rates.
Rates on dividends, savings income and property income will rise by 2 percentage points, directly affecting investors and landlords.
Homes valued at more than £2 million will face a new surcharge similar to a mansion tax starting in 2028. This targets wealthier homeowners and aims to increase fairness in the tax system.
From 2029, salary sacrifice pension contributions above £2,000 per year will be subject to National Insurance, removing a key advantage currently used by higher earners.
The government is raising revenue to support public services and welfare
The Office for Budget Responsibility forecasts weaker growth and ongoing economic pressures. To stabilise public finances, the government is using a combination of:
Part of the increased revenue will finance the end of the two-child benefit cap and other measures aimed at reducing poverty and improving social support.
Different groups will feel the Budget in different ways
Pensioners
You will see a higher State Pension, but may also be pushed into paying income tax due to frozen thresholds.
Workers on Low or Moderate Incomes
The rise in the minimum wage and continued support schemes may help with cost-of-living pressures.
Homeowners and Investors
If you own a high-value property, receive dividends, rent out property or rely heavily on pension tax strategies, you will likely face higher taxes.
Families
Larger families stand to gain significantly from the removal of the two-child benefit cap.
This Budget marks a noticeable policy shift.
Instead of broad tax cuts, the government is focusing on:
It represents a rebalancing of who pays and who benefits within the UK tax system.
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