Budget 2025 - Key Tax & Revenue Measures

26th November 2025

Freeze on income-tax thresholds until 2030-31 — The thresholds for paying higher-rate income tax will be held steady until 2030-31. That means with wage or inflation-linked pay rises, more income will fall into higher tax bands. This change is expected to raise roughly £7.6-8 billion annually by 2029/30.

New "mansion tax" / high-value home surcharge — Homes valued over £2 million will be subject to an additional annual property tax (on top of existing council tax), to take effect in April 2028. It's projected to raise about £400 million per year by 2029/30.

New mileage-based charge for electric (and plug-in hybrid) vehicles — From April 2028, electric vehicle (EV) drivers will pay a per-mile charge (≈ 3p per mile). This is part of plans to recoup foregone fuel duty revenues as use of EVs rises. Estimated yield is around £1.4 billion.

Higher taxes on gambling & remote gaming — Gambling duties, especially on online/remote gaming, are being raised. According to early summaries, this is intended to raise over £1 billion+.

Changes to pensions & salary-sacrifice rules — Contributions made via salary-sacrifice pension schemes (above a minimal threshold) will be subject to National Insurance in future years (from ~2029), reducing the tax benefit of these arrangements.

Scrapping / reform of certain tax-free savings and capital-gains rules — As part of broadening the tax base, there are adjustments to reliefs and allowances, including changes affecting some capital-gains and employee-ownership trust tax reliefs.

In total, the Budget is expected to raise about £26 billion extra over the next few years from these and other tax increases.

Welfare, Benefits & Social Support

Abolition of the "two-child benefit cap" — The limit that restricted child benefit payments to two children for low-income families will be removed from April 2026. This restores benefits for larger families and is expected to have significant social impact, though at a considerable cost.

Combined with other welfare-oriented measures, the Budget signals a partial shift—toward supporting families, while raising revenues from higher earners and wealth-holders.

Business, Investment & Economy Measures

The Budget documents include a broad package of policies affecting business taxation, investment incentives, and public finances, reflecting attempts to balance raising revenue with encouraging investment.

There is also a consultation on certain taxes (e.g., business-rates reform, treatment of low-value imports, landfill tax, digital services tax) — suggesting potential further changes ahead.


What It Means — Broad Impacts & Trade-offs

For many households, the freeze on income-tax thresholds + new taxes means that even without a nominal tax-rate rise, they are likely to see higher effective tax bills over time — particularly if incomes rise.

Owners of high-value properties and higher-earning households will carry a larger share of tax burden (through the "mansion tax," pension-tax changes, capital-gains / savings reforms).

The new EV mileage charge signals a shift in how vehicle taxation will work in a net-zero / post-fossil-fuel economy — reflecting the government's intention to compensate for declining fuel-duty revenues.

At the same time, measures such as removing the two-child benefit cap show that the government aims to soften impacts on vulnerable families, and reorient some social support.

For businesses and investors, the mix of increased taxes, reforms, and consultations points to a more uncertain tax environment — particularly for savings, investment, and property-related activity.

Wider Context - Why These Changes Are Happening Now

According to the new fiscal outlook from Office for Budget Responsibility (OBR), the government faces large deficits and fiscal pressures amid high public borrowing costs, weak productivity growth, and cost-of-living pressures. The Budget is thus framed as necessary to “plug a multibillion-pound shortfall” while balancing commitments to public spending.

The government appears to be shifting more of the tax burden toward wealth, assets, consumption and high income — rather than raising headline rates on income or VAT — possibly to shield lower and middle income households (though freeze-threshold effects still hit those on modest pay rises).