On Wednesday 26 November 2025, the Chancellor Rachel Reeves delivered the 2025 Budget. Here is a summary of the key points.
Tax
The Chancellor has announced a freeze on income tax thresholds for a further three years until 2030-31. VAT and national insurance contributions will not rise.
Tax rates on property savings and dividend income has increased by two percentage points.
Mansion taxes
There will be an annual charge of £2,500 for properties worth more than £2m and £7,500 for properties over £5m from 2028. This will be an additional charge to Council Tax.
Inheritance tax
The Chancellor has announced an inheritance tax change to allow transfer of 100% relief allowance between spouses.
Payments from the blood infection compensation fund will be exempt from inheritance tax.
Salary sacrifice pension contributions
Salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from national insurance contributions from April 2029.
Basic and new state pension rates will be increased by 4.8%.
National minimum/living wage
The minimum wage has increased from £10 per hour to £10.85 per hour for 18-20 year olds and from £12.21 per hour to £12.71 per hour for the over 21’s.
Funding will be in place to make training under-25 apprentices free for SMEs.
Capital gains tax relief
The 100% relief on capital gains tax on businesses sold to employee ownership trusts will be cut to 50%.
Gambling duties
The remote gaming duty, associated with the highest rate of harm, will increase from 21% to 40%. The duty on online gambling has been increased to 25%.
Fuel duty
The fuel duty will be frozen until September 2026.
Electric vehicles
A new electric vehicle duty will be in place amounting to 3p per mile for electric cars and 1.5p per mile for plug-in hybrids. Mileage tax for electric vehicles will be implemented in April 2028.
Funding
£370m has been pledged for the Northern Ireland executive, £505m for the Welsh government and £820m for the Scottish government.
£4.9bn will be invested into the NHS. £5m will be dedicated to secondary school libraries. £18m is being pledged to improve playgrounds in England.
Two child benefit cap
The two child benefit cap where parents can only claim universal tax credits for their first two children will be scrapped from April 2026.
ISAs
The Chancellor will cut the ISA allowance unless part of it (£8,000 of the £20,000) is invested in a stocks and shares ISA.
The Chancellor is also applying a tobacco, vaping, alcohol and soft drinks levy.
Medical prescription charges are being frozen alongside rail costs in January 2026. Energy bills are forecast to reduce by £150 next year.
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