Autumn Budget 2025
Overview
The Chancellor, Mrs Reeves, delivered a Budget focused on stability, long-term investment, welfare reform and cost-of-living support.
The Budget confirms that both fiscal rules are met:
· A current budget surplus by 2028/29, and
· Falling public debt as a share of GDP by 2029/30.
Fiscal headroom stands at £21.7 billion, more than double that forecast earlier in the year.
Public investment is maintained, with major infrastructure and regional programmes continuing.
Economic and Fiscal Outlook
OBR growth forecast for 2025 upgraded from 1% → 1.5%.
Productivity forecast reduced to 1%, lowering future tax receipts by £16bn by 2030.
Borrowing falls each year, reaching £67.2bn by 2030/31.
Public sector debt expected to peak at 83.7% in 2028/29, falling to 82.2% by 2030/31.
Tax Measures
Income tax & NIC thresholds frozen until 2031, increasing revenue through fiscal drag.
Pension salary-sacrifice reform (from 2029)
· Only the first £2,000 of annual salary-sacrifice pension contributions will receive employer NI relief.
· Contributions above this level lose NI advantages.
Savings, dividend and property income taxes rise by 2p across basic, higher and additional rates.
Capital Gains Tax: Employee Ownership Trust relief reduced from 100% → 50%.
Inheritance Tax: agricultural and business property relief becomes transferable between spouses.
ISA reform (from April 2027):
· Allowance remains £20,000, but £8,000 must be invested (flexibility retained for over-65s).
High-value property surcharge (from 2028):
· £2,500 annually for homes over £2m
· £7,500 annually for homes over £5m
Business, Growth and Investment
Enterprise Management Incentive scheme expanded.
Reforms to Enterprise Investment Scheme and Venture Capital Trusts to support scaling businesses.
Introduction of UK Listings Relief: 3-year stamp duty exemption for newly listed UK companies.
Major infrastructure commitments reaffirmed, including:
· Lower Thames Crossing
· Midlands Rail Hub
· TransPennine Route Upgrade
· Northern Powerhouse Rail
Significant regional packages for:
· Wales: AI growth zones, SMR at Wylfa, semiconductor investment
· Scotland: Grangemouth low-carbon funding, Inverclyde infrastructure, Kirkcaldy redevelopment
· Northern Ireland: skills and manufacturing support
England’s metro mayors receive £13bn in devolved funding.
Transport and Motoring
Electric Vehicle Duty (from 2028):
· 3p per mile for EVs
· 1.5p per mile for plug-in hybrids
£2bn EV grant extended to 2030; £200m for charging infrastructure.
Fuel duty 5p cut extended to September 2026.
New fuel-price transparency system (“Fuel Finder”) to reduce average bills.
Welfare and Families
Two-child limit on child benefit abolished from April, restoring support for all eligible children; expected to lift ~450,000 children out of poverty.
Youth Guarantee (backed by £820m): every 18–21-year-old offered:
· A college place,
· An apprenticeship, or
· Personalised employment support.
· Paid work offered after 18 months of unemployment.
Disability benefit reforms: return to face-to-face assessments.
Motability scheme updated to remove luxury vehicles.
Class 2 voluntary NI for UK nationals abroad restricted to those with 10 years of UK work/residence.
NHS, Education and Public Services
All NHS efficiency savings reinvested into frontline services.
£300m for NHS digital improvements.
250 Neighbourhood Health Centres, with 100 open by 2030.
Schools:
· £5m for secondary school libraries
· £18m for playground upgrades
· Continued support for school rebuilding programme
It was also announced all payments from the infected blood scandal scheme are exempt from inheritance tax (IHT).
Cost-of-Living Measures
Annual household energy bills will fall by £150 from April 2026 through removal of legacy policy costs (including the ECO scheme in its current form).
Rail fares frozen for the first time in 30 years.
Bus fare cap extended.
Prescription charges frozen.
State pension rises 4.8% under the triple lock.
IMPORTANT INFORMATION
The content of this summary is intended for general information purposes only which is not intended to address your particular circumstances. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
While we believe this interpretation to be correct, it cannot be guaranteed that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this budget summary. Thresholds, percentage rates and tax legislation may change in Finance Acts and bases of, and reliefs from, taxation are subject to change and their value depends on an individual’s personal circumstances.