UK Autumn Budget 2025: How will it impact your finances?

After months of speculation, UK Chancellor Rachel Reeves presented the Autumn Budget on 26 November, unveiling a substantial £26 billion package of tax increases, alongside targeted spending measures. Her aim? To address the UK’s persistent inflation, rising unemployment and high interest rates – pressures weighing heavily on households and businesses.

Reeves positioned the measures as a pragmatic step towards stabilising the economy and fostering long-term growth. The Chancellor chose to raise taxes over increasing borrowing or cutting spending, with taxes forecast to rise to an all-time high of 38% of gross domestic product (GDP) by the end of this parliament.[1]

What was particularly noticeable was how many of the measures that the media were speculating about prior to the announcement – such as a cap on gifting and the abolition of taper relief on inheritance tax (IHT) – didn’t come to pass. This highlights the importance of wealth planning based on facts rather than speculation.

Below, we break down the key developments and their practical implications for your wealth management, followed by insights from Guy Foster, Chief Strategist at RBC Brewin Dolphin, on the broader economic impact.

As always, we’re here to assist you in optimising your wealth planning in light of these developments.

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Autumn Budget summary: Key points at a glance

How do the income tax changes affect you?

Thresholds to remain frozen

Announcement

• Personal tax thresholds will remain frozen until April 2031, extended from April 2028.

Impact

• Income tax threshold and personal allowance freezes combined with increasing incomes will push more people into higher tax bands.
• This is known as ‘fiscal drag’ and is essentially a ‘hidden’ tax rise, with individuals on the cusp of tax thresholds and those in the higher and additional tax brackets impacted the most.

Planning opportunities

• Spouse or civil partner planning: utilise income-generating assets to take advantage of both spouses or civil partners’ individual personal allowances and tax bands.
• Increasing pension contributions: reduce taxable income while saving for retirement.
• Investing in Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs): These offer generous tax relief but carry higher risks, so seeking financial advice is strongly recommended.
• Charitable giving: donations can lower your tax bill while supporting causes you care about.

Rates to rise on dividend, savings and property income

Announcements 

• The tax rates on income from dividends will increase by 2% from April 2026.
• The tax rates on income from property and savings will increase by 2% from April 2027.
• Once the new rates are implemented, property, savings and dividend incomes will also be taxed later in the income tax calculation, lessening the effect of tax reliefs. This will be legislated for in the Finance Bill 2025-26.

Impact

• Savings and property income: rates rise to 22%, 42% and 47%.
• Dividends: rates increase to 10.75% and 35.75%, with the additional rate remaining at 39.35%.
• Reliefs and allowances will only be applied to property, savings and dividend income after they have been applied to other sources of income (which are subject to lower rates of tax) potentially increasing an individual’s overall tax liability. 

Planning opportunities

• Individual Savings Accounts (ISAs) and international bonds could complement or replace existing structures to provide a better tax position.
• Individuals may also wish to consider the structure (if any) in which they hold their properties.
• It could be prudent to bring forward dividend payments from businesses to avoid April 2026 rate increases.
• Consider triggering chargeable events on onshore and international bonds before April 2027 to tax gains under current (lower) savings rates.

With thresholds frozen until 2031 and rates rising on savings, property and dividend income before then, individuals may find their tax liability rising significantly. As such, proactive planning with a financial adviser or wealth manager across all these matters is key.

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Get in touch

If you’d like to talk to us about how the Autumn Budget 2025 may impact your finances, contact us directly on 020 7246 1111 or request a callback by clicking below.

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What are the pension changes in the Budget 2025?

Announcement

• The government will charge employer and employee National Insurance contributions (NICs) on pension contributions above £2,000 per annum made via salary sacrifice, with effect from April 2029.

Impact

• Reduced tax savings: employees currently save up to 8% in NICs, while employers save 15%. The cap will erode these benefits for amounts over £2,000.
• Lower take-home pay: NI deductions on sacrificed income above £2,000 will shrink net pay.
• Employer incentives may decline: higher NI costs for employers could reduce their willingness to pass savings back to employees.
• Threshold planning disrupted: higher earners (e.g. those near £100,000 incomes) may struggle to use salary sacrifice to reduce taxable income below key thresholds.

Planning opportunities

• Optimise tax bands: align pension contributions with your income tax bracket to maximise relief.
• Spouse or partner strategy: balance income and assets between partners to leverage joint tax efficiency.
• Diversify investment structures: use ISAs, general investment accounts and pensions to spread savings and minimise tax exposure.
• Maximise employer benefits: ensure you contribute enough to qualify for full employer pension matching and confirm if NI savings are passed on.
• Review thresholds: if targeting income limits (e.g. £100,000), explore alternatives to salary sacrifice for reducing taxable income.

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High value council tax surcharge

Announcements

• From April 2028, an annual high value council tax surcharge (HVCTS) will be levied on properties worth £2 million or more in England.

The government will consult on the implementation of this additional charge in 2026, after which we expect further details to be made available.

Threshold	Annual rate (£)
£2 million-£2.5 million	£2,500
£2.5 million-£3.5 million	£3,500
£3.5 million -£5 million	£5,000
£5 million+	£7,500

Impact

• Roughly 145,000 properties will be affected, according to estate agent Savills.
• Ensuring there is sufficient liquidity to pay the charge may be a challenge for some (especially where the property in question is a main residence rather than a let property).
• This surcharge may also have an impact on the market value of affected properties due to the additional annual cost.
  

Planning opportunities

Ahead of additional information being provided, individuals may wish to consider the following, but reserve action until further detail emerges:

• Property valuations will be important, including taking into account factors that may increase or decrease the value of a property that is close to the threshold.
• As the charge is applied to owners and not occupiers, consider whether renting a property (rather than buying) would be more attractive.
• Downsizing to a property with a lower value may reduce or eliminate the charge.
• It seems that properties in Wales and Scotland are currently not included, which could provide an opportunity for those located near the border.
• Consider whether trophy properties are owned in the UK or abroad. For example, a grander holiday home abroad and smaller UK property may be preferable.
• Tax planning around splitting ownership titles between multiple individuals or entities may provide opportunity.
• Reconfiguring a single property into smaller multiple properties may also be worth considering.
• Tax efficiency savings elsewhere may free up liquidity to pay this charge. 

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Inheritance tax (IHT)

Rachel Reeves implements new IHT changes.

Announcement

• The freeze to the IHT threshold of £325,000 and the residence nil-rate band of £175,000 per person (where available) have been extended a further year to April 2031.
• Lifetime gifting rules and allowances remain unchanged.
• It’s worth remembering that the government is also implementing previously announced reforms meaning pensions are to become subject to IHT from April 2027.
• Shortly after the Budget, the government also announced that the £1 million 100% APR/BPR allowance coming into effect in April 2026 would be increased to £2.5 million. As this allowance is transferrable between spouses or civil partners, a couple can leave up to £5 million in qualifying assets at 100% relief from inheritance tax.

Impact

• More individuals’ estates will be pushed over the taxable threshold due to inflation and growth on asset values. The IHT threshold has been frozen at £325,000 since 2009 (if increased by CPI it would now be worth £523,000).
• Where someone dies over the age of 75, the recipient of their unused pension funds will pay income tax at their own marginal rate on withdrawals. From April 2027, if the pension is liable to IHT at 40%, beneficiaries subsequently paying the additional rate of income tax at 45% can face an effective tax rate of 67% on an inherited pension.
• Those with significant business assets, working farms or qualifying alternative investment market (AIM) shares may, for the first time, face an IHT liability on those assets. For a business owner with a shareholding of £10 million, the IHT liability could increase from zero under current rules to £1.5 million from April 2026.
• The transferable allowance for agricultural and business property will lessen the need for first death planning to maximise the allowance between spouses and civil partners.

Planning opportunities

• Withdrawing the tax-free lump sum allowance from a pension and utilising this during your lifetime to fund spending or make gifts to family members remains an efficient way to reduce the value of one’s pension subject to IHT. 
• Lifetime gifting, including the ability to make immediately exempt gifts out of excess income (as long as it doesn’t affect your standard of living), remains an effective way to reduce the value of one’s wider estate subject to IHT.
• Placing qualifying agricultural and business property into trust pre-April 2026 can be done without an IHT entry charge. From April 2026, only the first £2.5 million will be relieved. Any excess will give rise to an entry charge, with a further charge possible should the settlor die within seven years. For business owners anticipating an exit and wishing to set aside a portion of shares in trust as part of their succession plan, there remains a limited opportunity to place a larger value of shares in trust without an upfront charge.

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Cash ISAs

Announcements

• The full annual stocks and shares ISA allowance remains at £20,000 per tax year.
• The cash ISA annual allowance will be cut from £20,000 to £12,000 per tax year from 6 April 2027.
• This change will not apply to over 65s, who will keep £20,000 cash ISA allowance.

Impact

• Could affect individuals’ ability to accumulate cash savings in a tax-efficient manner.
• Some cash savers may be risk averse to investing in a stocks and shares ISA.

Planning opportunities

• Spouse or partner strategy: balance income and assets between partners to leverage both allowances.
• Diversify investment structures: use pensions, general investment accounts, ISAs, international bonds, corporates and private funds to minimise tax exposure.
• Over 65s: can continue to put the full £20,000 allowance into a cash ISA.
• Re-evaluate saving objectives: short term versus long term.
• Those looking for low-risk, tax-efficient investing could consider using a stocks and shares ISA to invest in lower-risk strategies such as cash funds.
• Alternatively, individuals could look to gilts (government bonds) and corporate debt (qualifying corporate bonds) to generate tax-efficient returns. When held without a tax wrapper (e.g. in your personal name and not in an ISA, pension or qualifying corporate bond), they provide returns free of capital gains tax (CGT) but are subject to income tax. As a result, low-yielding investments that generate returns through capital gains can be attractive lower-risk alternatives to cash ISAs.

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Capital gains tax (CGT)

Reeves’ Autumn Budget includes changes to CGT.

Announcements

• The CGT Autumn Budget announcements focus primarily on Employee Ownership Trusts (EOTs), with relief reduced from 100% to 50% of the gain, effective for disposals from 26 November 2025.
• The government cited the escalating cost of the relief, projected to reach £2 billion by 2028–29, as the reason for ensuring the incentive remains proportionate.

Impact

• This revision significantly alters the net proceeds for business owners pursuing an EOT exit strategy, with the effective tax rate increasing from nil to 12% on the full gain.
• While employee ownership remains government-supported, the financial incentive for the vendor is materially lower, necessitating a recalibration of business valuations and personal financial planning objectives.

Planning opportunities

• For future planning, the EOT remains a viable succession option, but careful modelling of the reduced tax benefit is essential.
• Vendors will now incur a substantial CGT liability, and due to the immediate effect, existing plans and alternate exit strategies must be considered.

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What are the new EIS and VCT investment limits?

Announcements

• To help address what is referred to as the scale-up finance challenge, the government is doubling the investment thresholds and gross assets test of existing Venture Capital Schemes – Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCTs) – to reflect that companies are raising increasingly larger rounds at an early stage. 
• The VCT upfront income tax relief will decrease from 30% to 20% from April 2026.

New limits of VCTs and EIS

	Current rate	New limit from April 2026
Annual company investment limit	£5 million (£10 million for knowledge intensive companies)	£10 million (£20 million for knowledge intensive companies)
Lifetime company limit	£12 million (£20 million for knowledge intensive companies)	£24 million (£40 million for knowledge intensive companies)
Gross assets test	£15 million before share issue; £16 million after share issue	£30 million before share issue; £35 million after share issue

Impact

• The doubling of investment thresholds and gross assets for Venture Capital Schemes and EIS are designed to allow for additional tax-advantaged funding to early stage businesses.
• While these investments remain high risk with the potential for a total loss of capital, this will offer the potential for investors to invest in high growth businesses at later stages.
• VCT investments lose out on a portion of upfront income tax relief but maintain the benefit of paying tax-free dividends (a valuable income stream for many investors) as well as being capital gains tax free.
• Qualifying EIS investments will retain 30% upfront tax relief as well as inheritance and capital gains benefits.

Planning opportunities

• Investors should have the confidence to either continue using or explore using these investment options where appropriate, especially in the context of a rising tax environment which can be offset by the associated tax reliefs. 
• The relative merits of VCT versus EIS investing should be closely assessed considering the reduction in upfront tax relief on VCT investments.
• Significant risks are involved with these types of investments and advice is strongly recommended.

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Other notable announcements

A number of other changes or proposals were announced in the Budget that will either come into force in the future or will be open for consultation. Here, we’ve gathered some of note.

• Lifetime ISA modernisation. The government is looking to replace the existing ‘Lifetime ISA’ (£4,000 allowance to support those buying a first home) with a simpler version. A consultation will be published in early 2026. 
• Combating tax evasion. The UK will be looking to combat tax evasion through the automatic exchange of information on real estate from 2029/2030.
• Excluded Property Trusts established before 30 October 2024 will benefit from a £5 million cap on periodic and exit charges, with the cap being backdated to 6 April 2025.
• CGT for protected cell companies: Further changes to non-UK resident CGT will take effect from 6 April 2026 that will impact Protected Cell Companies (PCCs), although further details are not yet available. 
• Share-for-share exchanges and reorganisations can largely be undertaken in a tax-neutral way, which provides opportunity for further planning. With immediate effect, anti-avoidance provisions will apply where the main purpose (or one of the main purposes) is to secure a tax advantage that they would not ordinarily have been entitled to.
• Post-departure trade profits. There is currently no charge to tax if a distribution or dividend is made from ‘post departure trade profits’ (profits that accrue to the company after the individual left the UK, which are determined using a just and reasonable basis). Post-departure trade profits will be brought within the scope of the temporary non-resident rules from 6 April 2026, resulting in dividends payable whilst non-UK tax resident being chargeable to tax in the UK.

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The Autumn Budget: Economic analysis and investor impact

Commenting on the outlook for the UK economy, Guy Foster, Chief Strategist at RBC Brewin Dolphin, said: “There are always political and economic stakeholders to be managed when releasing a Budget. The latter, including the Office for Budget Responsibility (OBR) and the financial markets, seem to have been appeased, however it typically takes longer to assess the former.

“It was well known that the chancellor would need to cut spending or raise taxes because changes to the OBR’s growth forecasts meant that she was no longer on track to meet her fiscal rules. In response, she has undertaken to increase borrowing in the near-term, while raising the tax burden later. 

“The bulk of the delayed pain will come from keeping tax thresholds frozen, allowing more taxpayers to drift into higher tax brackets as their wages rise. Its proponents will argue that the burden of this Budget lands on those with the broadest shoulders, but freezing thresholds increases the number of broad-shouldered individuals (if defined as those paying higher rate tax) from around 8% of the adult population in 2020 to 16% now.

“Investors had been braced for worse and seem to be breathing a sigh of relief in the hours after the release of the Budget. Bond yields, which ultimately determine the cost of new borrowing for the government, have fallen slightly. The pound is up and there isn’t any meaningful change in the outlook for interest rates.

“One of the most eye-catching elements of the Budget is the high value council tax surcharge (HVCTS) or ‘mansion tax’. Just under 1% of homes nationally are estimated to be worth £2 million. At the margin, this will further diminish demand for higher value homes, but this was already weak in anticipation of such a policy. 

“The transactional costs associated with such properties – such as stamp duty, which would be £153,750 on a £2 million property – dwarf the surcharge. While those are one-offs and the surcharge is an ongoing cost, at an effective rate of no more than 0.15% even modest house prices gains would comfortably offset the charge.

“Overall, however the good news is that the chancellor has raised the margin by which she is meeting her fiscal rules, reducing the risk that further measures might be required in future budgets.”

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When does the Autumn Budget come into effect?

The Autumn Budget 2025 measures have staggered implementation dates.

With immediate effect:

• IHT nil-rate band freeze extended to 2031
• CGT relief on EOTs reduced from 100% to 50% of the gain.
• IHT cap for Excluded Property Trusts established before 30 October 2024
• Changes to the share-for-share rules for CGT

April 2026:

• Dividend tax increases of 2% to 10.75% and 35.75%
• Abolition of dividend tax credit for non-UK residents
• New investment thresholds and gross assets test for EIS and VCTs
• Further changes to non-UK resident CGT that will impact PCCs
• IHT anti-avoidance measures applied for agricultural property held by non-UK entities

April 2027:

• Cash ISA annual allowance cut to £12,000 per tax year (for those under the age of 65)
• Savings and property income rates rise to 22%, 42% and 47%

April 2028:

• High value council tax surcharge/‘mansion tax’. For properties worth over £2m

April 2029:

• Employer and employee NICs become payable on pension contributions above £2,000 per annum made via salary sacrifice

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Autumn Budget 2025 FAQs

What does the Budget mean for pensioners in 2025?

Those over 65 will continue to keep their full £20,000 cash ISA allowance and despite previous rumours, the 25% pension tax-free lump sum remains unchanged.

However, as the IHT threshold of £325,000 and the residence nil-rate band of £175,000 per person have been extended to April 2031, and with pensions being subject to IHT from April 2027, more estates may be pulled over the IHT threshold. If the current income tax treatment of pensions remains unchanged, beneficiaries could face both income tax and IHT on inherited pensions and in some cases, this combined tax could reach 67% on inherited pensions.

Seeking guidance from a wealth manager could help you manage your IHT and pension planning.

What does the Autumn Budget mean for landlords?

There have been property income tax rises for landlords. The tax rates on income from property will increase by 2% from April 2027, increasing the basic rate to 22%, the higher rate to 42% and the additional rate to 47%.

From April 2028, an annual HVCTS/‘mansion tax’ will also be applied for properties worth over £2m in England, starting at £2,500 for a £2m-£2.5m property to £7,500 for a £5m property.

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Looking ahead

While this list of measures is not exhaustive, we have highlighted what we consider the main points impacting personal finances and investments. For more detail, speak to your RBC contact or appropriate professional adviser.

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[1] OBR Economic and Fiscal Outlook, November 2025

The value of investments, and any income from them, can fall and you may get back less than you invested. Investment values may increase or decrease as a result of currency fluctuations. RBC Brewin Dolphin is not a tax specialist and this does not constitute tax advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist.  Information is provided only as an example and is not a recommendation to pursue a particular strategy. We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell or offer to make a purchase or sale of such securities from time to time. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.rbcwealthmanagement.com/en-uk. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Information is provided only as an example and is not a recommendation to pursue a particular strategy.

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