Attivo’s Autumn Budget 2025 overview

“The most important thing now is to have a plan.”

– Jon Stevens, FPFS MBA, Managing Director of Financial Planning at Attivo

Yesterday, Chancellor Rachel Reeves finally unveiled her long-awaited Budget, following the consideration of a wide range of tax changes to help plug a £30bn gap in the UK’s public finances.

In the lead-up, the Chancellor had been weighing various options amid flip-flops and U-turns, making this fiscal statement a topic of intense speculation and scrutiny.

The challenge for the Chancellor has been to craft a package that raises revenue without stalling economic recovery or going back on core political promises.

After all, Reeves has pledged not to return Britain to austerity and to support families with the rising cost of living – all while protecting the NHS and other public services.

As Reeves shelved plans for the first hike in income tax rates since 1975, this left her needing to introduce a series of smaller rises to fill the gaping ‘black hole’ in public finances.

However, for UK households, this raft of changes makes the already complex tax landscape even more complicated to navigate.

Jon Stevens, FPFS MBA, Managing Director of Financial Planning at Attivo, says: “Periods of uncertainty can be unsettling, but here at Attivo, we cut through the speculation and will always keep you focused on your long-term goals. In a seemingly ever-changing financial and tax planning landscape, we are here to offer clarity and advice.”

The latest announcements, Jon adds, only serve to reinforce the value of carefully considered financial planning. “At all costs, a knee-jerk reaction needs to be avoided. The most important thing right now is to have a well-crafted and informed plan.”

Key Autumn 2025 Budget Changes

Here, we take a look at some of the key Budget changes, how they may impact your finances and your lifestyle, and what actions you might want to consider.

1. Freeze on income tax thresholds

Prior to the Budget, the Chancellor ruled out a hike in income tax. However, she did announce a freeze on income tax thresholds until 2031 (thresholds were first frozen in 2021).

This move, combined with rising wages, means many more people will be forced into higher tax bands – a phenomenon known as fiscal drag. This could result in those affected paying thousands more in additional income tax.

Attivo’s Jon Stevens says: “Following the announcement to extend the income tax threshold freeze, high earners could find themselves paying more in tax without any real boost to their purchasing power. Very high earners are affected less because they already have no personal allowance.”

What can you do?

• Pension contributions can still be an effective way for earners to bring down their income tax burden.
• Sensible planning involves making the most of existing tax relief.
• If married (or in a civil partnership), you could also consider transferring assets (such as a second property) to your spouse if they are subject to a lower tax band.

2. Tinkering with cash ISAs – and a drive towards investing

The Chancellor proceeded with rumoured plans to cut the amount savers can put into a cash ISA – albeit with an age concession attached.

While the overall allowance will remain at £20,000, the Chancellor has stated that from April 2027, £8,000 will now be earmarked for stocks and shares (different rules apply for the over-65s, who will retain the full cash allowance).

The change aims to encourage more people to invest in stocks and shares.

Jon says: “Attivo already recommends clients look at investing, rather than keeping money in cash. The Chancellor’s reduction to the cash ISA limit is in line with our view that clients should be encouraged to invest.”

He adds, “When inflation is high, the value of the money held in a cash ISA diminishes, and savers may find their savings have lost value in real terms. Inflation is still squeezing households, and everyday costs are rising faster than earnings. At present, staples are costing more than they did even a year ago.

“Fiscal drag will only increase the tax burden further, leaving many families worse off.”

What can you do?

• Ensure you are still saving sufficient cash in an ‘emergency fund’, then consider moving beyond that.
• Remember that investing can potentially improve your financial returns and levels of savings, resulting in better financial outcomes.
• Whatever you do, don’t let this change to cash ISAs discourage long-term saving.

3. Reform of salary sacrifice

Despite rumours, there were no changes to the current rules on pension tax relief, nor was there any announcement on the rule allowing savers to take 25% of their pension pot tax-free.

That said, as speculated, the Government has confirmed it will introduce restrictions on the amount that can be contributed to a pension via ‘salary sacrifice’.

From April 2029, salary-sacrificed contributions above £2,000 will be subject to both employer and employee National Insurance (NI).

Changing this popular pension-boosting method will mean savers miss out on valuable NI savings, pushing up long-term costs for workers planning their retirement.

There are fears this move could discourage some higher-earning employees from contributing to pensions via salary sacrifice due to the loss of tax reliefs.

What can you do?

• Don’t let this deter you from increasing your own contributions beyond auto-enrolment minimums.
• Boosting contributions is an essential way to invest in your future.
• If you’re already enrolled in a scheme, be sure to maximise it while you still can.
• It may be wise to seek independent advice on the best approach for you, such as making contributions to any other personal pension saving accounts to maximise the use of available tax relief.

4. IHT rules unchanged – but previous announcements on IHT (including pension funds in estates) will still go ahead

While Inheritance Tax rules were left untouched in this latest Budget, the fact remains that the threshold has been frozen at £325,000 since 2009 – and will now stay frozen until 2031 (had it increased in line with inflation, it would currently be over £500,000).

Jon says: “It’s no longer only the very wealthy who must pay; the estates of many more ‘average income’ households are now also being caught in the IHT net.”

Additionally, there has been no rowing back on the announcement the Chancellor made this time last year to bring pensions into the scope of IHT from 2027.

Jon says: “Drawing pensions into the IHT net makes retirement planning and estate planning even more complex.”

In a further unpopular change set out a year ago, the Chancellor said that IHT reliefs for business and agricultural property will be reduced from April 2026.

Jon adds: “No further announcements were made in the latest Budget to change this status quo. The looming changes to the IHT rules will affect all sorts of people – including those with pensions, large estates, farms and business assets. Right now, it is more important than ever to protect your family’s wealth.”

What can you do?

• You cannot afford to be complacent about estate planning.
• Brush up on methods to help pass on as much of your wealth as possible, such as making financial gifts.
• Be sure to get to grips with the new IHT rules for agricultural and business assets. For example, from April 2026, families can transfer 100% relief allowance between spouses.
• Given the increasing complexity of IHT, seeking independent advice on the best course of action for you – and your family – is more important than ever.

5. Dividend tax rate increase

From April 2026, tax rates on dividends, property and savings income will rise by two percentage points, reaching 10.75% for the basic rate and 35.75% for the higher rate.

This increase in dividend tax is essentially a ‘raid’ on money made from stocks and shares.

It will also increase the tax burden on small business owners and comes just a year after they were forced to absorb hefty National Insurance rises.

Jon adds: “Dividend tax rate increases for basic and higher rate taxpayers, combined with higher property income taxes and a Mansion Tax, will deal yet another blow to the finances of many business owners.”

What can you do?

• Protect your wealth by saving within tax-efficient wrappers such as ISAs and pensions.
• If married, you can consider making use of two sets of dividend allowances by taking advantage of ‘interspousal transfers’, which allow investments and cash to be shifted to a spouse without tax.[Note that married couples can also utilise two sets of capital gains exemptions, as well as two ISAs.]

6. Introduction of a new ‘Mansion Tax’

The Chancellor announced that people who own properties in England* worth more than £2 million will face a new ‘high-value council tax surcharge’ from April 2028.

There will be a banding system with four bands in total. Homes worth between £2m and £2.5m will face an annual charge of £2,500, rising to £7,500 for those worth £5m or more.

Jon says: “This annual levy on high-value homes will increase the cost of property ownership.”

*Different rules apply in Scotland and Wales.

7. New ‘Pay-Per-Mile’ Scheme for EVs

From 2028-29, motorists with electric vehicles will face a new 3p-per-mile tax, while plug-in hybrids will be taxed at 1.5p per mile.

The idea is that drivers are taxed according to how much they drive.

Meanwhile, fuel duty has been frozen at the current rate for a further five months.

8. Change to Capital Gains Tax (CGT) when company owners sell shares

The CGT relief that company owners receive when selling shares to employee-owned trusts will be halved from 100% to 50%. This measure is effective immediately.

Attivo is here to help navigate uncertainty

With so much change and unpredictability, it can feel hard to know where to begin.

But here at Attivo, we’re ready to help you navigate the ‘new normal’.

We focus on facts, clarity and proactive tax planning, ensuring our clients’ financial strategies remain robust, relevant and aligned with their goals, no matter the tax environment.

Let Attivo be your trusted partner. We can help support you in carving out a path toward your financial goals.

Book a ‘Discovery’ meeting with one of our Financial Planners

For more on IHT, read our IHT guide

 

This article is intended for information only; it is not financial advice. We recommend consulting your Financial Planner before making any changes to your financial plans. Attivo (a trading name of Attivo Financial Limited) is authorised and regulated by the Financial Conduct Authority (FCA), however the FCA does not regulate activities such as Inheritance Tax and estate planning and are therefore not covered by the FCA regulatory framework.