Autumn Budget 2025

Following a succession of leaks, back-tracks and U-turns, the hotly anticipated and widely rumoured 2025 Autumn Statement delivered today was by no means ambivalent – albeit the last-minute OBR leak made its delivery somewhat of an anticlimax.

A year ago we heard Rachel Reeves’ first Budget as a new and optimistic Chancellor set on restoring economic growth and curtailing government borrowing. Today, it is clear this has not materialised as the Chancellor delivered the headline statistic downgrading the UK’s growth forecast by 0.3% for the next five years.

What followed was a string of tax rises across the board as the Chancellor unveiled her plan to meet Labour’s self-imposed fiscal rules to bring tax receipts in line with government spending. Having ruled out a blanket rise in income tax in the volatile run-up to today’s Budget, the Chancellor is taking a piecemeal approach by tweaking the more nuanced taxes and reliefs. Here are the winners and losers.

Winners

Low-income workers – As a pre-Budget teaser, the government announced last night that the minimum wage would increase to £12.71 per hour in April 2026 for those aged 21 and over, a 50p increase on the current rate. For those aged 18 to 25, it will rise to £10.85. The National Living Wage will also rise from £12.21 to £12.71 per hour. Labour will certainly have had their manifesto commitment to the ‘working people’ in mind, but small businesses who are still reeling from the hikes in National Insurance and the National Living Wage only this time last year will again feel the addition to their costs.

UK Retailers – British retailers currently struggling to compete with overseas retailers who can export goods worth less than £135 per package without paying customs duties, will welcome the end to this relief for their overseas competitors. This will particularly hit fast fashion retailers who have undercut UK online retailers with their highly competitive prices. This will also be seen as a win for e-commerce sustainability.

Parents with universal credit – Parents with larger families will be pleased to hear that the two-child benefit cap will be fully scrapped from April 2026. The OBR expects this will affect 560,000 families as the Chancellor makes a personal pledge to tackle child poverty.

Households – As the ‘cost of living’ crisis persists into the winter of 2025, the Chancellor is trying to throw households a lifeline by announcing a package of measures which they say will reduce the cost of household energy bills by £150 on average from April 2026.

Pensioners – The Chancellor confirmed that the state pension will rise by 4.8% from April 2026 in line with average wages. The flat rate will increase to £241.30 per week for those who reached state pension age after April 2016. This puts an additional £574.60 a year in pensioners’ pockets but at £12,547.60 year, the increase brings the state pension dangerously close to being taxed. This would potentially cause HMRC a headache from April 2027 as a further rise will take this over the personal allowance. As tax is not collected at source on the state pension, pensioners whose sole income is the state pension may end up paying small amounts of tax via Simple Assessment which could result in a huge administrative burden for HMRC for very little gain for the Treasury. The government is exploring ways to avoid this and will reveal further details next year.

Drivers – The freeze in fuel duty will continue until August 2026. In addition to this, the Chancellor announced petrol station forecourts will have to sign up to the Fuel Finder scheme which will give drivers access to the cheapest possible prices and is expected to save each driver around £40 per year.

Bingo players – Those who get their kicks from the bingo hall will be hearted to hear that the 10% Bingo Duty charged on bingo operators will be abolished entirely from April 2026 – “10% – off it went!”.

Train passengers – All regulated train fairs in England will be frozen from March 2026, allowing passengers to travel for one year without seeing increases in the price of season tickets, and peak and off-peak returns, until March 2027.

Losers

Savers – Savers were hit by a double whammy today with increasing tax rate on savings income, and reforms to the ISA allowances. Currently, savings income is subject to income tax at the standard rates of 20%/40%/45%, however, from April 2027, these rates will increase for savings income by 2%. At the same time, the individual allowance for funds invested into cash ISAs will be limited to £12,000 per tax year, leaving the remaining £8,000 of the total £20,000 ISA allowance to be invested in stocks and shares ISAs only. Older taxpayers were protected in today’s Budget as over-65s will continue to enjoy the full £20,000 cash ISA allowance.

Investors – The Chancellor cited incentivising investment into British businesses as a motive for her reforms to the cash ISA allowance but seemingly undermined this in the next breath to announce a 2% rise in the basic and higher tax rates on dividend income. From April 2026, dividends above the £500 tax-free allowance will now be taxed at 10.75% and 35.75%, for basic and higher-rate taxpayers. The additional dividends rate of 39.35% remains the same, and is notably still lower than the higher and additional rates for other income and savings, perhaps in the hope that investors are not completely discouraged.

Landlords – The hat trick targeting of investors came with the final blow to income tax rates on rental property income. This will also rise by 2% at the basic, higher and additional rates. The idea is to level the playing field for taxpayers with different types of income, particularly those whose investment income escapes the National Insurance charge levied on ‘working people’.

Employees (and employers) – Employees’ workplace pension contributions made via ‘salary sacrifice’ (i.e. before their salary is subject to tax and NICs), will be charged to both employee’s and employer’s NICs from April 2029 above a £2,000 annual allowance. This brings the tax treatment of salary sacrifice contributions, which currently are not subject to National Insurance at all, in line with pension contributions made post-tax, either through the new salary-sacrifice arrangement, or by moving to a standard pension scheme.

High-value home owners – after much speculation in the pre-Budget run up as to a so-called “mansion tax”, it was confirmed today that a new annual “high value council tax surcharge” ranging from £2,500 will be levied on properties worth between £2m-£2.5m, and up to £7,500 for properties worth more than £5m. There will be two additional bands within this range. It feels like an easy win for Labour who have promised to tax ‘wealth not workers’ despite the new surcharge affecting less than 1% of homeowners and will be more burdensome to homes in London and the South East where property prices are higher on average than the rest of the country.

Electrical vehicle drivers – Electric vehicles are now in the Chancellor’s headlights, having swerved mileage-linked charges levied on petrol and diesel vehicles for years to date. The new mileage tax on electric vehicles will apply from April 2028, and will be charged at 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids. The rate will be inflation-linked to the CPI meaning electric vehicle drivers can expect excise duty rises year on year. It will be paid alongside existing Vehicle Excise Duty.

Companies – The writing down allowance main rate for companies on capital expenditure will fall from 18% to 14% from April 2026, The blow is slightly softened with a new 40% first-year allowance on main rate assets (Cars, second-hand assets, and assets for leasing overseas will not be eligible), however, whether this offsets the investment disincentive from the main rate reduction, coupled with business’ rising labour costs, will remain to be seen.

Gamblers –Players of on-line casino style games may see worsening odds or a hit on their payouts as Remote Gaming Duty is to be increased by a whopping 19 percentage points to 40% from April 2026. This is in addition to a new remote betting rate of 25% to be introduced from 1 April 2027. Remote bets on horse racing will be excluded from these changes.

Milkshake drinkers – Those partial to a bottled milkshake or pre-packaged latte will have been disappointed with the other Budget sneak-peek announced yesterday on reforms to the so-called “sugar tax”, with new sugar-content thresholds for packaged drinks to be caught by the Soft Drinks Industry Levy. While the tax is directly levied on suppliers, the tax burden is likely to be passed on to sweet-toothed consumers through higher prices.

Taxpayers in general – With the freezes on allowances announced last October, the Chancellor has doubled down today as freezes to the Personal Allowances, income tax and NIC thresholds are extended by another three years until at least April 2031. Fiscal drag will continue to affect most taxpayers and with inflation, this is one of the most effective “stealth taxes” on taxpayers as 780,000 more people are expected to fall into the tax system and 920,000 creeping into the higher rate tax band. This will continue to be an important revenue stream for the Government who can rely on this to top-up the national purse, while keeping their promise not to increase the headline tax rates.