Rachel Reeves delivered her second Budget on 26 November 2025.
The headlines talked about billions raised and billions spent, but how will it affect your finances?
As always, it depends on your circumstances. So let’s work through what’s changing and when.
8 Things Everyone Should Know About The Autumn Budget
Here’s the top eight headlines about how the Budget will affect millions across the country:
- Pay rises will be taxed more. Thresholds are frozen until 2031 – as your wages rise, more of your income is pushed into higher tax bands. So you’ll be taxed more, even though the tax rates haven’t changed.
- Landlords, investors, and savers pay more. Tax on rental income, dividends, and savings interest is all going up by 2%.
- ISAs matter more than ever – but cash is being restricted. Under-65s can only put £12,000 into cash ISAs from April 2027. The government wants you to invest in stocks and shares, which still have a £20,000 allowance.
- Pensions won’t escape inheritance tax anymore. From April 2027, your unused pension counts towards your estate.
- State Pension going up by up to £550. The triple lock delivers – 12 million pensioners benefit from April 2026.
- Minimum wage rising to £12.71. That’s around £900 extra per year for full-time workers aged 21 and over. Younger workers get an even bigger percentage increase.
- Some genuine help with bills. Energy bills down £150, rail fares frozen for a year, fuel duty cut extended. Small wins, but they add up.
- Electric vehicle owners will pay per mile from 2028. Around £240 a year for the average driver – roughly half what petrol and diesel drivers pay in fuel duty
Let’s dive into some specifics.
How The Budget Can Help With Everyday Costs
The government has put together a package aimed at easing the squeeze on household budgets, and some of these measures will be noticeable.
Energy Bills Coming Down
From April 2026, households in Great Britain should see around £150 knocked off their annual energy bills.
Currently, certain green energy costs get added directly to your bill. The government is moving that burden to general taxation instead, which means you’ll still pay for it, but through your taxes rather than as a separate line on your energy statement. For most households, this works out cheaper.
Six million lower-income households will also receive a £150 Warm Home Discount this winter, up from three million previously.
Rail Fares Frozen
Regulated rail fares in England will be frozen for a full year from March 2026 – the first freeze in three decades.
If you’re on one of the pricier routes, the saving could be over £300 compared to what you’d have paid otherwise. This covers season tickets, peak return fares and off-peak returns between major cities.
Fuel Duty Extended (For Now)
You’ve been paying 5p less per litre on petrol and diesel since March 2022 – a temporary cut that keeps getting extended. It’s staying in place until August 2026, then gradually returns to normal by March 2027.
The government had also planned to increase fuel duty in line with inflation, which would have pushed prices up further. That’s been scrapped.
Between the two, drivers should pay around £89 less next year than they would have done otherwise.
Prescription Costs Staying The Same
If you’re in England and regularly pick up prescriptions, the cost stays frozen at £9.90 per item throughout 2026-27. A small thing, but it adds up for some.Â
The Tax Threshold Freeze: Why It Matters More Than You Might Think
This is probably the single biggest revenue-raiser in the Budget, yet it doesn’t involve changing any tax rates at all. Understanding how it works is worth your time.
Income tax thresholds have been frozen since 2021, and the Chancellor has now extended the freeze to April 2031. Your Personal Allowance stays at £12,570, the higher rate threshold remains at £50,270, and the additional rate threshold stays at £125,140.
Here’s why that matters in three steps:
- Normally, these thresholds rise each year roughly in line with inflation or wage growth. When they don’t, but your wages do go up, more of your income ends up in higher tax bands – even though your actual spending power hasn’t improved much.
- Say you earned £50,000 last year and got a 4% pay rise to £52,000. Under normal circumstances, the higher rate threshold might have risen too, so you’d still pay the same proportion in tax.
- But with the frozen thresholds, that extra £2,000 pushes you over the £50,270 higher rate threshold, meaning you now pay 40% tax on £1,730 of your income that was previously taxed at 20%. That’s an extra £346 in tax on a pay rise that probably just about kept pace with your rising bills.
This is sometimes called “fiscal drag” because inflation gradually drags more people into higher tax bands without anyone having to announce an unpopular tax rise. The Treasury expects this extended freeze to raise an additional £8 billion by 2030.
National Insurance thresholds for employees and the self-employed follow the same pattern, frozen until 2031.
The practical takeaway? If you’re expecting pay rises over the next few years, more of that money will go to tax than you might assume.
Minimum Wage Going Up
If you’re on the National Living Wage or National Minimum Wage, your hourly rate is increasing from April 2026.
Workers aged 21 and over will see the rate rise from £12.21 to £12.71 per hour – a 50p increase. For someone working full-time, that works out to around £900 extra per year before tax.
Younger workers get a proportionally bigger rise. If you’re aged 18 to 20, your rate jumps from £10.00 to £10.85 per hour – an 85p increase worth roughly £1,500 a year for full-time work.
The government has said it eventually wants to scrap this separate rate entirely and move towards a single adult minimum wage, which would mean further increases for this age group down the line.
For 16 and 17-year-olds and apprentices, the rate rises to £8.00 per hour.
State Pension Going Up
Good news here. The Triple Lock remains in place, which means the State Pension rises each year by whichever is highest: inflation, average earnings growth, or 2.5%.
From April 2026, those on the full new State Pension will see weekly payments rise from £230.25 to £241.30 – that’s £12,547 a year, an increase of over £550. The basic State Pension rises to £184.91 per week (£9,615 a year), up by around £440.
Over twelve million pensioners will benefit from this increase.
Changes to ISAs
The overall annual ISA limit stays at £20,000, but from April 2027, the amount you can put into cash ISAs will be limited to £12,000 for savers under 65. If you’re over 65, you can still put the full £20,000 into cash.
The government wants to encourage people to invest in stocks and shares rather than holding everything in cash. Whether that’s right for you depends entirely on your circumstances, risk tolerance, and how long you’re saving for.
Higher Taxes on Income From Assets
If you receive income from property, dividends, or savings, there are changes ahead.
The government’s stated rationale is that employment income attracts National Insurance contributions, while other forms of income don’t, so they’re bringing the rates closer together.
Property Income
From April 2027, rental income will be taxed at new, separate rates:
- Basic rate taxpayers: 22% (up from 20%)
- Higher rate taxpayers: 42% (up from 40%)
- Additional rate taxpayers: 47% (up from 45%)
If you’re a landlord, this represents a meaningful increase in your tax bill. A higher rate taxpayer with £10,000 of taxable rental profit would pay £4,200 rather than £4,000 – an extra £200. Scale that up to £30,000 of rental profit, and you’re looking at £600 more per year.
Dividends
Dividend tax rates are increasing by 2% points from April 2026. The ordinary rate rises to 10.75% and the upper rate to 35.75%, though the additional rate stays unchanged at 39.35%.
To put this in context: if you hold shares outside an ISA and receive dividends, you currently have a £500 tax-free allowance. Anything above that gets taxed at these rates, depending on your income.
The increase isn’t dramatic for small amounts, but company directors who pay themselves partly through dividends, or anyone with a substantial investment portfolio outside tax wrappers, will feel it.
Savings Interest
Savings income tax rates will also increase by 2% from April 2027. However, most people won’t notice this change.
The Personal Savings Allowance means that basic rate taxpayers can earn £1,000 in interest tax-free, and higher rate taxpayers can earn £500. Over 90% of taxpayers don’t pay any tax on savings income at all. You’d need fairly substantial savings earning decent interest rates before this affects you.
High-Value Property Surcharge
From April 2028, owners of residential properties in England valued at £2 million or more will face a new High Value Council Tax Surcharge. This applies to fewer than 1% of properties.
The charge starts at £2,500 per year for properties valued at £2 million to £5 million, rising to £7,500 for properties valued at £5 million or more. Unlike regular Council Tax, this will be levied on the owner rather than the occupier – so if you own a high-value property but rent it out, you’ll pay the surcharge, not your tenant.
The government will consult on the details, including support for people who own valuable properties but have limited income to pay the charge.
Changes to Pension Contributions and Inheritance
Salary Sacrifice: A Change Worth Understanding
If your employer offers salary sacrifice for pension contributions, pay attention to this one.
From April 2029, only the first £2,000 of pension contributions made this way will be free of National Insurance. Anything above that will be treated as NICs, as if you’d received it as normal salary.
The government says 74% of basic rate taxpayers using salary sacrifice won’t be affected – most people aren’t sacrificing more than £2,000 a year. However, if you’re a higher earner making substantial contributions this way, the maths changes. Someone currently sacrificing £10,000 a year would pay an extra £640 in National Insurance on the £8,000 above the cap (at the 8% employee rate).
Income tax relief on pension contributions remains unchanged. This only affects the National Insurance advantage.
Pensions and Inheritance Tax
Currently, if you die with money left in your pension, it usually passes to your beneficiaries outside of your estate for Inheritance Tax purposes. This has made pensions an attractive way to pass wealth to the next generation – you could spend other assets first and leave your pension pot intact.
From April 2027, that changes. Unused pension funds will be brought within the scope of Inheritance Tax. If you’ve been deliberately spending down other assets while preserving your pension for your children to inherit, you’ll need to rethink that.
Support for Families
Two-Child Limit Scrapped
The two-child limit, introduced in 2017, restricted Universal Credit’s child element to a family’s first two children. From April 2026, this cap is being removed entirely.
The government estimates this will lift 450,000 children out of poverty. For a family with three children receiving Universal Credit, this could mean an additional £3,500 per year. The change applies across Great Britain, and the government is funding Northern Ireland to implement the same change if the Executive chooses to do so.
Universal Credit Increasing
The Standard Allowance – the basic amount everyone on Universal Credit receives regardless of circumstances – is going up by over 6% in April 2026. For a single person aged 25 or over, that’s an increase of around £295 a year, which is over £110 more than a standard inflation-linked rise would have delivered.
Other working age benefits rise by 3.8% in line with September’s inflation figure.
Free School Meals and Breakfast Clubs
Free school meal eligibility is expanding to all pupils in England with a parent receiving Universal Credit. The government says this will lift 100,000 children out of poverty. Free breakfast clubs are also rolling out to more schools, with 2,000 new schools joining the scheme in 2026-27.
Childcare Support for Larger Families
Families with three or more children will be able to claim more childcare costs through Universal Credit. The previous cap was based on costs for two children; this is being raised to reflect the reality that larger families face larger childcare bills.
A New Tax for Electric Vehicle Drivers
All vehicles contribute to road wear and congestion, but electric vehicle drivers currently don’t pay fuel duty because they don’t buy petrol or diesel.Â
From April 2028, a new charge called Electric Vehicle Excise Duty (eVED) will address this. It’s a mileage-based supplement – you’ll report how many miles you’ve driven each year and pay accordingly.
The rate will be around half what a petrol or diesel driver pays in fuel duty per mile. An average EV driver can expect to pay around £240 per year, or £20 per month. Plug-in hybrids will pay a reduced rate.
The government has been explicit that there will be no requirement for GPS trackers or to report when and where you drive – just total mileage.
To ease the transition, the threshold for the Vehicle Excise Duty Expensive Car Supplement is rising from £40,000 to £50,000 for zero-emission vehicles from April 2026.
What You Should Do About The Labour Budget
Don’t make panic moves without advice. Here’s what’s worth considering:
- If you have savings or investments outside an ISA: Tax on dividends and savings interest is rising. Use your £20,000 ISA allowance before April – you can’t backdate it.
- If you’re a landlord: Property income tax goes up from April 2027, on top of existing mortgage interest restrictions. Review whether your ownership structure still makes sense.
- If you use salary sacrifice for pensions: From April 2029, only the first £2,000 sacrificed is free from National Insurance. If you’re contributing more than that, consider front-loading before the cap arrives.
- If you’ve been preserving your pension for inheritance: Unused pensions will count towards inheritance tax from April 2027. You may need to rethink the order in which you draw down your assets.
How Double Point Can Help
Working out how Budget changes affect your specific situation means looking at your income sources, assets, family circumstances, and plans for the future.
At Double Point, we help individuals and families understand how tax changes affect them and identify ways to structure their affairs efficiently before new rules take effect. Whether you need help with your self-assessment, want to review your tax position, or simply want to understand your options, book a free consultation with us today.Â
Our chartered accountants will take the time to understand your circumstances and give you clear, practical advice.