Autumn Budget 2025: confirmed changes and what they mean for your money

A simple guide to the 2025 Autumn Budget with confirmed measures, and how the changes could affect your household finances.

The Government already revealed a handful of money related changes ahead of the main Budget.

These early announcements gave a clue about the direction of travel, and most of them are aimed at households who have struggled since prices shot up.

Here’s what’s changing…

Income tax and National Insurance thresholds frozen

The Chancellor is freezing income tax and NI thresholds for an extra three years beyond 2028.

This means more people will drift into higher tax bands as wages rise, even if they’re not earning what you’d think of as a “higher” income.

For many households, it means take-home pay won’t stretch as far over the next few years.

Two-child limit on benefits scrapped

The rule that stopped Universal Credit and Child Tax Credit paying for a third or later child will end in April.

Families with more than two children will receive support for every child again, which will make a huge difference to bigger households struggling with bills.

Cash ISA limit changing

From April 2027, under-65s will only be able to put £12,000 a year into a cash ISA. The rest of the usual £20,000 allowance will need to go into investment ISAs.

If you prefer cash savings because it feels safer for you, it means you won’t be able to keep the full amount in cash anymore.

Salary sacrifice pension NI advantage capped

From 2029, you’ll only be able to “salary sacrifice” up to £2,000 a year before National Insurance starts applying.

Anyone who uses salary sacrifice to grow their pension will see the perk shrink, meaning slightly less take-home pay if you contribute above this limit.

State pension rising by 4.8%

Thanks to the triple lock, both the basic and new state pension will go up 4.8% in April, which is above current inflation.

It gives pensioners a little extra protection against rising bills.

Higher taxes on dividends and savings income

From April, dividend tax rates will rise by 2 percentage points, and from April 2027, all savings-income tax rates will also increase.

Anyone earning extra from shares, rental income or interest will see less land in their account.

Tax on rental income rising from

Landlords will pay an extra 2 percentage points in tax on rental income from April 2027.

This could lead to higher rents if landlords try to pass on the extra cost.

Fuel duty cut extended

The 5p “temporary” fuel duty cut will stay in place until September 2026.

This keeps petrol and diesel prices a bit steadier for drivers, especially those travelling for work or care duties.

Premium cars removed from the Motability scheme

Some higher-priced vehicles will be excluded from Motability.

Anyone using the scheme for mobility support may have fewer models to choose from.

Mileage tax for electric and hybrid cars

A new mileage-based tax on electric and plug-in hybrid cars will start in 2028.

EV ownership will still be cheaper than petrol, but it won’t be tax-free anymore, especially for higher-mileage drivers:

• Pure electric cars will pay 3p per mile
• Plug-in hybrids will pay a lower rate: 1.5p per mile

While you may not drive an electric vehicle yourself, this will have a knock-on effect on electric and hybrid taxis, so you may see an increase in fares.

New “mansion” tax for homes worth over £2 million

Properties in England valued above £2 million will face a new annual council-tax-style surcharge of £2,500 to £7,500.

It will mainly affect very high-value homes in the South East and London.

VAT scrapped for small overseas packages

From 2029, items under £135 bought from overseas retailers will no longer be VAT-exempt.

It means cheap imports from places like China may get pricier.

Sugary drinks tax extended to milkshakes and lattes

From 2028, pre-packaged milkshakes and flavoured lattes will face the sugary-drinks tax.

Some popular drinks at supermarkets and coffee chains are likely to get more expensive.

Green levies removed from energy bills

Environmental levies are being taken off energy bills and funded through tax instead.

The Treasury says this will “save households £88 a year”, though the exact saving will depend on usage.

Prescription charges will stay under £10

The Chancellor has promised that prescription costs in England will stay capped under £10.

For people with long term health issues, this can save a fair chunk over the year.

It also avoids another jump in costs at a time when GP waiting lists are already tough enough.

Rail fares will be frozen

Train fares have been creeping up for decades, so this freeze is a rare bit of good news.

The Government says this is the first proper freeze in around 30 years. It should help commuters and families who rely on trains for work, school travel, or visiting relatives.

National Living Wage and Minimum Wage will go up in April

The National Living Wage is set to rise by around £900 a year for full time workers, and the National Minimum Wage by about £1,500 for younger workers.

It means more money in your pay packet without waiting for a promotion or switching jobs. For anyone on a tight budget, even a small rise can make a difference to the weekly food shop, although it’s still a fair way off the real living wage.

Help to Save extended

The government has confirmed that the Help to Save scheme will be made permanent from 2028 and expanded to support even more low-income households.

At the moment, it offers a 50% bonus on savings for eligible people on Universal Credit or Working Tax Credit, letting them save up to £50 a month and earn up to £1,200 in bonuses over four years.

From 2028, the scheme will also open to parents on Universal Credit with children in education and unpaid carers who provide at least 35 hours of care a week, bringing an extra 1.5 million people into the scheme.

250 neighbourhood health centres will be funded

The Government also confirmed investment for 250 new Neighbourhood Health Centres.

The idea is to make it easier to see doctors, nurses, and community health services without long delays or big gaps in local provision. This is part of the plan to cut NHS waiting lists further.

What this means for your household budget

If you’re already stretching every pound, even small policy changes can make life easier. Higher wages put more money in your pocket. A rail fare freeze could save a commuting family hundreds over the year. A cap on prescriptions helps anyone with health conditions or a child who ends up needing regular medication.

For families on lower incomes, the Budget is also a sign of where the Government thinks support is most needed.

It’s worth giving yourself a few minutes tomorrow to review the confirmed list and work out how the new rules fit with your weekly budget.

A quick example of how this could affect you

Say you earn around the National Living Wage and rely on a season train ticket for work.

You might see your yearly wage rise by nearly £900 while your travel costs stay the same, but as the NI thresholds are frozen, you may end up paying more tax.

It’s a lot of swings and roundabouts.