Budget 2025: what does it mean for you?

Today was the much-anticipated day that Rachel Reeves delivers her 2025 Budget to the House of Commons. As always, in the run up to the event, there were leaks, speculation and even press releases from the Treasury.

So, even before the Chancellor stood up, we thought we knew that prescription charges would stay under £10, rail fares would be frozen, and the national minimum wage and the national living wage would go up by £1,500 and £900 respectively. We also knew that lots of sugary milkshakes and pre-packaged coffees would get slapped with the sugar tax. As it happened, some of these things didn’t get a Budget mention.

At the same time, we’d heard much second guessing in the media. Would the two-child benefit cap be removed? Could the Income Tax personal allowance remain frozen until 2030? Would there be a tax on very expensive houses? And would the annual tax-free ISA limit be slashed? The answer was yes… and no.

As always, we planned cut through the noise and compiled a list of the Chancellor’s key announcements as she made them. We still did that, but it turns out that the OBR released its economic and fiscal report early, effectively revealing large chunks of the Budget early. That made our job a lot easier!

We hope the information below helps you plan ahead and work out what Budget 2025 means for you.

Budget 2025 – key announcements

The announcements below are organised by category to help you navigate them easily.

Energy

Lower utility bills due to abolishing the energy company obligation (ECO) system. This will save households an average of £150 per year.

Pensions

Salary-sacrificed pension contributions above a yearly £2,000 threshold will stop being exempt from National Insurance from April 2029. This is estimated to raise £4.7 billion in 2029/30 and £2.6 billion in 2030/31.

Mine workers to get access to the investment reserve of the British Coal pension fund.

The state pension will rise by £440 per year – more for those on the new state pension.

Savings

£20,000 ISA annual limit to remain, but at least £8,000 of the full amount must be invested in stocks & shares ISAs. The over 65s will still be able to invest the full amount in cash ISAs.

Schools

£18 million to upgrade playgrounds in England.

£5 million for school libraries, with the aim that every primary school has a library by the end of the current parliament.

SMEs

Funding for under-25 apprenticeship training to be free for SMEs.

Tax

All Income Tax thresholds will remain frozen until 2030-31. This will quietly pull more people into the higher and additional rate tax bands. This could raise £8 billion annually by the end of this parliament.

A new high-value council tax surcharge (a ‘mansion tax’) on houses in England worth £2 million or more from 2028. It will be an annual £2,500 annually, rising to £7,500 for homes worth £5 million+

Tax rates on dividends, property and savings income will go up by 2 percentage points, raising £2.1 billion.

Payments made via the blood infection compensation fund will be exempt from Inheritance Tax.

The 100% relief on CGT on businesses sold to employee ownership trusts will halve to 50%.

A Stamp Duty break for three years for companies newly listing on the London Stock Exchange.

Remote gaming duty will go up from 21% to 40%. The duty on bingo will be abolished.

Vehicles

Fuel duty to be frozen at its current rate until September 2026. However, it will then end for the first time in years.

A new mileage tax (Electric Vehicle Excise Duty) on electric and plug-in hybrid cars from April 2028, at around half the fuel duty rate paid by petrol car owners. The OBR says: “In 2028-29, the charge will equal £0.03 per mile for battery electric cars and £0.015 per mile for plug-in hybrid cars, with the rate per mile increasing annually with CPI.”

Luxury vehicles to be removed from the Motability Scheme.

Wages

The national minimum wage will increase 8.5% to £10.85 for 18-20 year olds, and go up 6% for 16-17 year olds to £8.00. The apprentice rate will also go up 6% to £8.00.

The national living wage will go up 4.1% to £12.71. All increases will come into force in April 2026.

Welfare

The two-child benefit cap ‘within universal credit’ will be lifted from April 2026.

There will be additional checks on fraudulent welfare claims.

Face-to-face assessments for disability benefits will be reinstated.

We will be looking at some of these announcements over the coming weeks, so be sure to subscribe to our newsletter for updates.