Autumn Budget Briefing 2025
Autumn Budget 2025
Briefing from the Office of Neil Duncan-Jordan MP
Chancellor Rachel Reeves announced the Autumn Budget 2025 on 26th November 2025. The Chancellor announces a Budget each year to keep Parliament and the public informed of the government’s financial plans for the year. This usually includes information about pensions, tax, employment, welfare, and business.
This year, the Budget focused on reducing national debt and inflation, increasing employment rates, and reforming the welfare system. This is in line with the Chancellor’s ‘fiscal rules’, which are focused on keeping the budget in surplus and reducing net financial debt. This means that the government’s day-to-day spending should be matched by its revenues, and that net financial debt should decrease relative to the size of the economy and compared to the previous year.
The announcements made in the Budget on 26th November should help the government to meet these fiscal rules. The Chancellor says that the government has, and will continue to, meet its fiscal rules.
The Chancellor admits that she is asking everyone to “contribute more”, but that the Budget will “grow our economy through stability, investment, and reform”.
Below is a summary of the key announcements made in the Budget.
Incomes
• Income tax and employee National Insurance thresholds will be frozen at £12,570 until 2031. This means that more individuals will be either drawn into paying tax for the first time as their incomes reach the thresholds, or they will be drawn into a higher tax band, currently set at £50,270. I am urging the government to consider rebalancing the taxation system further so that those at the top of the income scale pay more and those at the bottom are protected.
Pensions
• In April 2026, the State Pension will be uprated by 4.8%, so pensioners on the new state pension will receive up to an additional £575 a year, whilst those on the old state pension will receive an extra £440.
• Even if the state pension goes over the personal tax threshold in 2027, the government has confirmed they will introduce a mechanism to ensure the state pension is not subject to tax.
• Members of the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS) will receive increases in line with inflation, capped at 2.5% per year, on pre-1997 accruals where their original scheme provided this benefit. This will begin in January 2027. This means that pensions will be kept in line with inflation, helping recipients to keep pace with the cost of living. However, schemes that are still operating and not in the PPF or FAS will not be required to pay indexation. This needs to be addressed.
• The government is closing loopholes in current Voluntary National Insurance contributions (VNICs) rules that allow those with a limited connection to the UK to build UK State Pension entitlement at a cheaper rate whilst overseas.
Inflation and Cost of Living
• The Budget directly cuts inflation by 0.4 percentage points next year. Inflation peaked in 2022 and has decreased since then. While inflation is still high, it is now decreasing and is expected to continue falling.
• The government is targeting inflation at its source, by bearing down on everyday expenses such as energy bills, transport and childcare costs to ease cost of living pressures.
Property and Council Tax
• From April 2028 there will be a high value council tax surcharge of £2500 for properties worth more than £2million. This will rise to £7500 for properties worth more than £5million. These payments may be deferred and paid on the sale of the property. The average house price in Poole is £340,000, and this surcharge is expected to affect less than 1% of the population nationally.
• Income received from property by landlords (eg. rental income) will be subject to an additional 2% levy from April 2027.
Energy Bills
• The Energy Company Obligation (ECO) scheme will be scrapped, and next year household energy bills will be reduced by £150.
• Over the next two years, £29million collected through fines and penalties on water companies will be reinvested into projects to clean up our rivers, lakes and seas.
Wages and Employment
• The Minimum Wage for 18 to 20-year-olds will go up to £10.85/hour from April 2026.
• The National Living Wage will go up to £12.71/hour from April 2026.
• The Apprentices rate will rise to £8 an hour.
• To tackle youth unemployment, the government will guarantee a six-month paid work placement for all eligible 18 to 21-year-olds who have been on Universal Credit and looking for work for 18 months.
• The Office for Budget Responsibility (OBR) expects total employment to increase from 34.2 million in 2025 to 35.4 million in 2030.
Benefits
• The two-child limit for universal credit and tax credit will be removed from April 2026. This will lift an estimated 450,000 children out of poverty.
• Universal Credit, Personal Independence Payments and child benefit will rise by 3.8% next April.
• Free school meals will also be rolled out to cover all households on Universal Credit by September 2026.
• The maximum amount that can be claimed towards childcare costs for those on Universal Credit will increase by £736.06 per child above the current two child cap.
• The threshold for eligibility to the Winter Fuel Payment for pensioners will be maintained at £35,000.
• Pension Credit Standard Minimum Guarantee will be uprated by 4.8% from April 2026.
NHS
• The government has announced increased funding for the NHS, including plans for 250 new Neighbourhood Health Centres to improve patient access to care and reduce waiting lists for elective care.
• The Budget also announced £300 million of additional capital investment in NHS technology to boost productivity, support staff and improve patient outcomes, driving the shift from analogue to digital.
• The cost of a single NHS prescription charge will be frozen at £9.90 for the second year in a row.
Tobacco, Alcohol and Gambling
• Duty rates on tobacco will increase by 2% from November 2025.
• Alcohol duty rates will increase in line with the Retail Price Index from February 2026.
• From April 2026 online casino gambling duty will rise from 21% to 40%.
• All duty on bingo will be abolished.
• Online bookies will be hit by a 25% duty, but there is no change to bets placed on the high street.
• Horse racing will be exempt from any of these changes.
Fuel Duty
• This has been frozen until at least until September 2026.
• By 2029-30, the government will commit over £2 billion for local councils to repair potholes, funded by the Electric Vehicle Excise Duty.
Electric Vehicles
• The government is boosting the Electric Vehicle Grant programme with an additional £1.3 billion of funding and extending it until 2029 30 to support more consumers to switch to EVs.
• The government is introducing a new mileage charge for electric and plug-in hybrid vehicles, which will come into effect in April 2028. There will be a consultation on the proposal issued shortly. Vans and lorries will be exempt from the charge.
• The government will allocate £100m to local councils to install more chargepoints where people live and work.
Taxis
• VAT will be added to private hire companies such as Uber from January 2026.
Motability Scheme
• From July 2026, 20% VAT will be added to any top-up payments made in addition to benefit payments under the scheme.
• Insurance Premium Tax of 12% will also be applied to all vehicles leased through the scheme.
• Tax changes will not apply to vehicles that have been substantially adapted for wheelchair users.
Rail Fares
• These will be frozen next year for all regulated train fares including most season tickets, commuter journeys and day returns.
Business Rates
• Customs duty will be added to parcels from online retailers to stop them undercutting high street retailers on price.
• The government will consult on how to provide tax incentives for entrepreneurs and business founders.
• Changes to business rates should benefit up to 750,000 hospitality, retail and leisure businesses but there is still an issue with many local pubs facing higher rateable values and a loss of tax relief.
Fishing and Coastal Growth Fund
• British fishing and coastal communities will benefit from £360 million investment to drive growth and boost the sector for the future as the Government launches its Fishing and Coastal Growth Fund. Further work will be done to see if Poole can benefit from this project.
ISAs
• The amount you can save tax-free will go down from £20,000 to £12,000 from April 2027. Over 65s will retain the full £20,000 allowance. Under 65s will be encouraged to put the £8000 into a stocks and shares ISA instead.
• An additional 2% tax on savings income will be introduced from April 2027.
• An additional 2% tax will be applied to income received from dividends from April 2026.
Government finances
• The Budget papers showed that debt will fall to £67.9bn by the end of the Parliament in 2029-30. Inflation is currently 3.5% for the year and predicted to fall to 2% from 2027 onwards. The government expects to reach a surplus in 2030 of £21.7bn. This means that the government is continuing to meet its fiscal rules, intended to grow a more stable economy.