Autumn Budget 2025: facing the future

Your Complete Guide to Every Key Change

The Autumn Budget 2025 arrives at a critical moment for the UK economy. After years of inflationary pressure, rising borrowing costs, and ongoing demands on public services, the Chancellor’s message this year is one of caution, recalibration, and long-term restructuring. Rather than offering headline-grabbing tax cuts, this Budget signals a shift toward a more sustainable and fair fiscal framework, one that seeks to raise revenue while supporting public investment and reshaping the way Britain taxes income, savings, and wealth.

Economic and Fiscal Landscape

The government’s fiscal plans are anchored in the expectation of modest but steady economic growth over the coming years. The projections included in the Budget reflect improving stability, supported by investment in infrastructure and ongoing recovery in productivity. At the same time, the Office for Budget Responsibility has forecast that the UK’s overall tax burden is on course to reach around 38% of GDP by the end of this Parliament, a historic high and a clear indicator of the government’s approach: raising substantial revenues while maintaining essential public spending.

The Chancellor also reaffirmed the commitment to reducing day-to-day borrowing and placing debt on a downward trajectory. These fiscal rules shape much of the policy direction and explain the lack of major tax reductions in the short term.

Personal Taxation: The Quiet Squeeze Continues

For individuals, the Budget maintains the freeze on income tax thresholds, extending the period of so-called “fiscal drag” as wage growth gradually pushes more earners into higher tax bands. While National Insurance remains unchanged in the immediate term, the Chancellor reiterated the government’s intention to simplify the system, with further updates expected in future fiscal cycles.

Dividend taxes also remain frozen, but the previously announced reduction of the Dividend Allowance from April 2026 continues as planned. Investors and company directors who rely on dividends for income will need to prepare for a noticeably tighter environment over the next few years.

Pensions and Savings: A Defining Shift for Higher Earners

One of the most consequential announcements concerns pension planning. Beginning in 2029, the government will introduce a £2,000 cap on the amount of salary individuals can divert into their pension via salary sacrifice before employer and employee National Insurance becomes payable. This marks a significant change for higher earners, many of whom have used salary-sacrifice arrangements as a key tax-efficient planning tool. The government estimates that this reform alone will raise £4.7 billion by 2029/30.

Importantly, the familiar 25% tax-free pension lump sum remains untouched for now, although the Budget notes that pension tax reform will remain an area of ongoing consideration.

ISAs also found themselves under increased scrutiny. While your internal draft noted speculation that the Cash ISA allowance for under-65s could fall from £20,000 to £12,000, the published Budget did not confirm this. What the Budget did confirm, however, is a broader review of ISA rules scheduled for 2026, signalling that reform in this area is likely still on the horizon.

Property, Wealth, and Capital Taxes

For property owners, the Budget introduces a new surcharge on high-value homes worth over £2 million. Although full details will be released later, the direction of travel is clear: the government intends to rebalance the tax burden toward wealthier homeowners and property investors.

Capital Gains Tax rates remain unchanged, but the gradual reduction of allowances continues. The government also highlighted that reliefs associated with second homes and property portfolios will be reviewed as part of a more comprehensive approach to taxing wealth.

This marks an important moment for landlords, second-home owners, and buy-to-let investors, who may face a new landscape of rising ownership costs and shrinking tax reliefs in the years ahead.

Business and Corporate Taxation

Businesses can expect a mix of continuity and reform. The main rate of Corporation Tax remains at 25%, and the Chancellor made no indication of increases in the medium term. However, several important updates will influence how businesses plan for growth.

Most notably, full expensing has now been made permanent, allowing companies to deduct 100% of qualifying plant and machinery investment from taxable profits. This measure, originally temporary, signals strong government support for capital investment and productivity.

The Budget also expands R&D incentives, particularly for SMEs engaged in science, technology, AI and advanced manufacturing. A new “Innovation Allowance” will further reward early-stage investment in strategic growth sectors.

Business rates reform is another significant development. After longstanding criticism of the outdated revaluation cycle, the government will move to a more frequent reassessment model that should reflect market conditions more accurately. High street retailers and hospitality operators will also continue to receive targeted support through 2025/26.

For owner-managed companies, the combination of frozen dividend thresholds, shrinking allowances, and the looming pension salary-sacrifice cap means that traditional extraction strategies will begin to deliver very different results than in past years. Many directors may need to revisit their approach well in advance of the 2026/27 changes.

Public Services and Infrastructure

Despite the need for fiscal tightening, public investment remains a central pillar of this Budget. The government confirmed additional funding for the NHS, with particular emphasis on digital upgrades and modernisation, aiming to reduce inefficiency and improve patient outcomes.

Transport infrastructure also receives a substantial boost, with billions allocated to rail upgrades, regional connectivity, and long-term green investment projects. Housing development zones, energy networks and environmental initiatives form part of a broader investment strategy intended to support long-term growth and productivity.

Cost of Living Measures

For households facing ongoing financial pressure, the Budget outlines several forms of support. Benefits and Universal Credit will rise in line with inflation from April 2026, while targeted energy bill assistance will continue for low-income families, pensioners and individuals with disabilities.

Childcare remains a priority for working families as the government expands the rollout of the extended 30-hour free childcare programme, allowing thousands more families to access the scheme over the next year.

A Subtle but Significant Shift in the UK’s Tax System

Although this Budget does not deliver dramatic tax increases or sweeping cuts, it represents a meaningful recalibration of the UK’s fiscal strategy. There is a clear move toward taxing income, savings and wealth more evenly, tightening reliefs, and focusing heavily on long-term stability rather than short-term political wins.

For individuals, investors and business owners alike, the changes announced, alongside those already planned for future years, mean that careful planning is more important than ever. From pensions to property, savings to business investment, the Budget has set the stage for a new tax environment that will evolve over the next several years.

Understanding these developments now, and adjusting financial strategies accordingly, will be essential in navigating the UK’s shifting fiscal landscape.

Need help navigating the Autumn Budget 2025? Speak to DAS Accounting & Partners

If you’re unsure how these changes may affect your tax position, business strategy or long-term financial planning, our expert advisors are here to help.

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Get in touch today to discuss how the Autumn Budget 2025 impacts you, your family or your business and how to stay ahead of the changes.