Budget 2025 - Changes That Could Affect You

26th November 2025

Income-tax thresholds frozen until 2030-31

Your personal allowance and higher-rate threshold won't rise for another five years.
Impact:
If your income increases with inflation or promotion, more of your pay is taxed.

Many people will drift into higher tax bands ("fiscal drag").

2. New annual tax on homes over £2 million (“mansion tax”)

A new yearly charge applies from April 2028 to properties valued over £2m.
Impact:

Affects high-value homeowners in London, the South East, and some rural hotspots.

May slightly reduce prices in the top end of the housing market.

3. New mileage charge for electric vehicles (EVs)

From April 2028, EV drivers will pay roughly 3p per mile.
Impact:

Running costs for EVs rise for drivers who travel long distances.

EVs still cheaper to run than petrol/diesel, but the gap narrows.

4. Two-child benefit cap removed (April 2026)

Families with more than two children will again receive full benefit payments.
Impact:

Significant financial boost for low-income families with 3+ children.

Large social-policy change; saves some families £2,000+ per year.

5. Pension salary-sacrifice perk reduced

Salary-sacrifice pension contributions above a basic minimum will be subject to National Insurance from around 2029.
Impact:

Higher earners lose one of their largest remaining tax advantages.

Pension contributions become slightly more expensive for employers and employees.

6. Reform of ISA and capital-gains reliefs

Some tax-free allowances and reliefs are reduced or restructured.
Impact:

Modest savers are mostly unaffected.

People with large portfolios, second homes, or business assets pay more tax.

7. Higher taxes on gambling and remote/online gaming

Gaming duty increased significantly.
Impact:

Frequent online gamblers may see higher stake costs.

Gambling companies pass some costs to customers.

8. Council-tax pressures expected to rise

While not a headline policy, local authorities receive less new funding than anticipated.
Impact:

Many councils expected to raise council tax above inflation.

Households may face higher annual bills from 2026 onward.

9. Possible future reforms signalled (consultations opened)

The government has begun consultations on:

Business rates

Digital Services Tax

Low-value import tax rules

Landfill tax
Impact:

These could increase costs for businesses and consumers later.

10. Freeze on inheritance-tax thresholds continues

IHT thresholds remain unchanged despite rapidly rising house prices.
Impact:

More estates fall into IHT.

Families may face larger bills upon inheritance.

11. Increase in child-care and family-support funding (targeted)

Targeted expansions for early-years support and local family services.
Impact:

Helps low-income families most.

Less impact for middle-income families, who face rising indirect taxes elsewhere.

12. Public-sector investment and infrastructure refocus

Shift toward maintenance rather than major new projects.
Impact:

Less large-scale construction over the next 5–7 years.

Employment effects for construction/engineering sectors.

13. Student-loan interest and repayment system tweaks

Adjustments based on inflation forecasts.
Impact:

Graduates may pay slightly more across the repayment period.

Thresholds for repayment may not keep pace with wage growth.

14. Green-energy transition continues, but funded differently

Reverse of previous EV tax incentives; introduction of new road-use taxation.
Impact:

EV ownership becomes less subsidised.

More cost pressure for renewable-energy investments.

15. Tax burden reaches record levels overall

The combination of threshold freezes, new charges, and reduced reliefs means the UK tax burden hits its highest level since WWII.
Impact:

Most households will feel higher taxes indirectly.

Wealthier households feel the largest direct increases.