What does the Autumn Budget mean for you?

On 26th November, Rachael Reeves shared the Autumn Budget - setting out plans to boost investment in the UK, support working people, and make the tax system feel fairer and more balanced.

This blog will cover the key announcements and why they might matter to you, your money, and your future as of November 2025.

1.    Pension changes

Salary sacrifice NI relief capped from 2029

From April 6^th 2029, only the first £2,000 per year of pension contributions you make through salary sacrifice will be exempt from National Insurance. Anything above this will still get Income Tax relief, but you’ll pay National Insurance on it.

If you’re in the Local Government Pension Scheme (LGPS), this will affect the tax savings you can get from Shared Cost Additional Voluntary Contributions (AVC) schemes – a tax-efficient way to top up your retirement savings using salary sacrifice.

·       Do you already have a Shared Cost AVC plan?

You can keep enjoying the benefits of double tax relief until the end of the 2028/29 tax year. It may be worth considering increasing your contributions, so you can make the most of it whilst you can. You can manage your contributions here.

·       Are you new to Shared Cost AVCs?

If you’re eligible, this scheme would allow you to add more to your pension with a double tax relief uplift on Income Tax and National Insurance Contributions. That means that every £100 added only costs a basic rate taxpayer £72.08* due to tax savings. Put your future first and apply today here whilst you’ve got this opportunity.

*Basic rate taxpayer savings are a guide & based on current Income Tax (20%) and National Insurance (8%) rates, which are subject to change. Whilst Shared Cost AVC schemes can offer valuable benefits, they may not be suitable for everyone. You can speak to a financial adviser if you require advice, or book a 1:1 session with a Financial Education Coach, for guidance and support at no cost to you.

State Pension to rise by 4.8% from April 2026

From April 6^th 2026, the new State Pension will increase by 4.8% under the Triple Lock. Meaning the Full New State Pension will rise to £241.30 per week, affecting those that reach the State Pension age after April 2016.

Government figures suggest the State Pension changes will benefit around 13 million pensioners, moving their State Pension benefits above inflation, with an increase worth over £550 a year. It means you’ll have more support in your later life from your State Pension income.

Voluntary National Insurance changes for those living abroad

From April 6^th 2026, there are big changes if you are a non-UK tax resident (typically living abroad) and want to top up your UK State Pension.

You will no longer be able to pay Class 2 voluntary National Insurance contributions whilst being a non-UK tax resident. Equally, to be allowed to pay Class 3 contributions, you’ll now need to have been living in the UK for 10 consecutive years, or have 10 years of prior National Insurance contributions to qualify for the State Pension.

This means that, if you’re a non-UK tax resident, it’s important to check your State Pension record, to know if you qualify and how much you’d be entitled to.

Inflation protection on older pension schemes

From January 2027, people with Defined Benefit (DB) pensions from before 1997, where the scheme has entered the Pension Protection Fund (PPF) or Financial Assistance Scheme (FAS), will now receive annual inflation-linked increases, capped at 2.5% annually.

If you or a family member has one of these older pensions, this protects your retirement income by helping it keep up with the rising prices and the cost of living. This gives a bit more security to households that rely on these pensions.

Unspent pensions eligible for Inheritance Tax from 2027

As announced last year, from April 6^th 2027, unspent pension pots will be counted as part of your estate for Inheritance Tax when death occurs.

This means that, it’s important to consider your options and the Inheritance Tax bill you may create from your estate. Remember, spouses/partners are exempt from Inheritance Tax, but anyone else may be liable.

If you’d like to learn more about how to navigate Inheritance Tax or the significance of having a Will, book your slot for our Estate Planning webinars here.

2.    Taxes – what’s changing & what is staying the same

Thresholds frozen until 2031

Income Tax and National Insurance thresholds are being frozen until April 6^th 2031. That means:

·       Personal allowances remains at £12,570 

·       Higher rate threshold remains at £50,270 

·       Additional rate threshold remains at £125,140

This means that if your income rises over the years, but the thresholds don’t, you may gradually pay more in tax. This is referred to as ‘fiscal drag’. Therefore, it’s important to plan and consider the tax saving opportunities available.

The changes to thresholds will affect the residents of England, Wales and NI, however, Scotland has their own Budget to decide their tax banding on January 15^th 2026. They may still be impacted by fiscal drag.

Inheritance tax changes

The Budget confirmed that Inheritance Tax thresholds will be frozen as their current levels until the end of the 2030/31 tax year. This refers to the £325,000 nil-rate band and the £175,000 residence nil-rate band rates respectively.

Two important updates were also confirmed:

·       Compensation paid under the Infected Blood scheme will now be fully exempt from Inheritance Tax, no matter how or when it’s passed on.

·       A new £1 million allowance for agricultural property relief and business property relief can now be transferred between spouses or partners.

Everyone’s estate is different, so it’s worth getting help to understand what your own inheritance tax bill might be.

Dividend income changes

From April 6^th 2026, the tax you pay on dividends from investments (outside an ISA) will rise by 2 percentage points:

·       Basic rate increased to 10.75%

·       Higher rate increased to 35.75%

·       Additional rate remains at 39.35%

This will only affect those with investments outside of a Stocks & Shares ISA, with an overall income over the personal allowance limit of £12,570, and an annual dividend allowance over £500.

Savings interest tax changes

Tax on savings interest is rising by 2% from April 6^th 2027 to:

·       Basic rates will rise to 22%

·       Higher rates will rise to 42%

·       Additional rates will rise to 47%

You’ll only pay this if the income you earn from savings is over your personal savings allowance, and your savings are not held in an ISA. So, it’s worth checking whether this would affect you.

New ‘property income tax’ for landlords

From April 6^th 2027, income landlords receive from rental properties will be taxed under a new property income tax rate, which will be a 2% increase from the current level:

·       Basic rates will be set at 22%

·       Higher rates will be set at 42%

·       Additional rates will be set at 47%

This means that we may see a slight rent rise when this is introduced, as landlords could rise the rent to cover their added tax on their income from properties.

Mansion tax added on properties over £2 million

From April 6^th 2028, properties valued at more than £2 million will face the ‘High Value Council Tax Surcharge (HVCTS)’ of at least £2,500.

The value of the surcharge will change in line with the property value:

·        £2,500 a year for properties worth between £2 million - £2.5 million.

·        £3,500 a year for properties worth between £2.5 million - £3.5 million.

·        £5,000 a year for properties worth between £3.5 million - £5 million.

·        £7,500 a year for properties over £5 million.

Therefore, if anyone with a home above the £2 million valuation limit, you will pay a HVCTS surcharge on top of your council tax bill.

3.    Income, savings & investments

National Living wage rising by 4.1%

From April 6^th 2026, the National Living Wage paid to workers aged 21 and over will rise by 4.1%, to £12.71 per hour. This works out to around an extra £900 per year for a full-time employee, before tax.

For others:

·       Ages 18–20: Living Wage will rise by 8.5% to £10.85 per hour

·       Ages 16-17 & apprenticeships: Living Wage will rise by 6% to £8 per hour

So if you are currently earning near minimum wage, you’ll see a boost in your pay – helping your income to stay in line with rising costs. Your employer may choose to review other pay brackets in line with this increase.

Cash ISA limits reduced for under 65s

The overall annual ISA allowance stays at £20,000, but from April 6^th 2027, there are new rules on how much can be held in a Cash ISA for under 65s:

·       You’ll only be able to add £12,000 of your annual allowance into a Cash ISA

·       The other £8,000 can go into a Stocks & Shares ISA

To clarify, for over 65s, the Cash ISA limit has been retained at £20,000.

If you typically keep your savings in a Cash ISA, and this is over £12,000 per tax year, you may need to start splitting your annual ISA allowance differently when this is introduced.

Plan 2 student loan repayments frozen

If you have a Plan 2 student loan (you started university in England or Wales between 2012 and 2023), the salary level at which you start repaying has been frozen at £29,385 until the end of the 29/30 tax year.

If you’re a graduate paying back a student loan, your repayments won’t increase unless your annual gross salary is above £29,385.

4.    Cars, Commuting and Travel

Fuel duty frozen until August 2026

The tax on petrol and diesel will remain at 52.96p per litre, as the temporary 5p cut has been extended.

From September 2026, the temporary cut will begin to be reversed and then potentially uprated in line with inflation.

A new charge for electric vehicles

From April 6^th 2028, there will be a new pay-per-mile charge on:

·       Fully electric cars: 3p per mile

·       Plug-in hybrids: 1.5p per mile

This is set to cost the average electric vehicle driver an additional £240 per year, and is expected to raise over £1 billion a year once established.

If you drive an electric vehicle, or are thinking about buying on, it’s worth factoring in this extra running cost alongside electricity, insurance and maintenance.

Expensive car threshold rises to £50,000

From April 6^th 2026, the Vehicle Excise Duty (VED) and Expensive Car Supplement (ECS) threshold for zero-emission cars is rising from £40,000 to £50,000.

Therefore, after April 6^th 2026, zero-emission cars with a list price that exceeds £50,000, will be required to pay the ECS charge when they take out a license. The current rate will be maintained for all other cars.

A mandatory Fuel Finder app introduced

A new ‘Fuel Finder’ app will be introduced in Spring 2026, requiring petrol stations to share up-to-date price information, and allow consumers to find the cheapest fuel wherever they go.

This means that petrol stations should not be able to over charge you, as you’ve got readily available information on cheap, local fuel.

Rail fare freeze

For the first time in 30 years, regulated rail fares in England will be frozen until March 2027.

Your season tickets, day tickets, off-peak tickets, and super off-peak tickets for rail journeys will not see an increase beyond the current level until at least March 2027.

It’s important to note that unregulated fares, such as first class, advance tickets, off-peak day ticket prices may vary, as these are set by train companies.

Remember, this change only applies for England.

5.    Family & Education

Two-child benefit cap removed

From April 6^th 2026, families with more than two children that are entitled to benefits, such as Universal Credit or Tax Credits, will be able to receive the child element for those benefits for all children regardless of family size.

This offers support to many families who have previously missed out on the support of raising a family with more than two children. This will help manage the rising everyday costs for larger families.

Investment into schools

Rachel Reeves pledged £5 million of new funding for new books in state secondary schools. This equates to around £1,400 per school.

Repeating a previous commitment, £10 million has been invested to ensure that every primary school has a library.

The government will also invest £18 million over two years in up to 200 playgrounds across England.

Take comfort that, if your child is of school age, their learning is being supported by the government, and they’re being given more opportunities for enrichment with a playground overhaul.

How can My Money Matters support you

Our goal is to keep you informed about changes that may affect you and your finances, so you can feel confident at every stage of your financial journey.

Here’s some helpful tips for My Money Matters users:

1.       If you’re eligible, consider making the most of a Shared Cost AVC whilst you can. You can apply here or manage your existing contributions here.

2.       Join us for regular information and support on a webinar. You can view our webinars here.

3.       With changes to Inheritance Tax, it’s important to consider what you’ll leave behind. We can help you get a free, basic Will today± – find out more here.

The Autumn Budget brings a mix of new opportunities and things to plan ahead for. Some changes take effect soon, others unfold gradually — but understanding them now helps you make informed choices for your money, your family and your future.

If you'd like help making sense of what these changes mean for you personally, we’re here whenever you need us.

Disclaimers

This blog post is intended for general information purposes only, and is not a recommendation of financial advice. The information included is accurate as of November 2025.

My Money Matters has no control or responsibility for the external pages linked within this blog, or where any subsequent links you may take you. A Shared Cost AVC scheme is a pension product for active LGPS members, and can only be accessed from age 55 onwards, rising to 57 in 2028. The scheme is facilitated by My Money Matters, and the fund you choose to invest into will be managed by your chosen provider.

±Whilst postage and packaging fees still apply, this Will opportunity can save you £180. Please note that more complex Wills or additional services are likely to be more expensive.

It’s important to remember that as your pension is invested, the fund value can go down as well as up, and you may get back less than you invest. The Pension eligibility and tax rules that apply depend on your individual circumstances and may change at any time.