Chancellor Rachel Reeves has unveiled her first full-year Autumn Budget – a package dominated by tax rises, frozen allowances and a clear message that households, not big business, will bear much of the cost of putting the public finances back on track.
With the UK’s tax burden heading for its highest level since the 1940s, and cost-of-living pressures still biting, here’s what the Budget will mean for your finances – and where it leaves the planet.
Expect to pay more tax
Income tax and NI thresholds frozen again: The biggest single revenue-raiser is the decision to freeze income tax and national insurance thresholds until 2031. This means your tax bands stay the same even as your pay rises, dragging more workers into higher rates.
- 920,000 more people are expected to become higher-rate taxpayers by 2030.
- The freeze will raise £8.3 billion a year.
- Reeves admitted the move will “affect working people” but said it avoids “austerity or reckless borrowing”.
Higher taxes on property, savings and investment income: From 2027, tax on property income, savings interest and dividends will all rise by two percentage points. Basic-rate taxpayers will pay 22 per cent, higher rate 42 per cent and additional rate 47 per cent. A new high-value council tax surcharge arrives in 2028:
- £2,500 a year for homes worth £2m to £2.5m
- Up to £7,500 for those above £5m
Cash ISA allowance slashed: From April 2027, the annual cash ISA limit will fall from £20,000 to £12,000 (with over-65s exempt). The stocks and shares ISA limit remains £20,000.
You may take a hit on pensions and investments
Pension salary sacrifice capped: From 2029, the first £2,000 of salary-sacrifice pension contributions will remain tax-free, but anything above that will attract full NI from employees and employers. This is expected to raise £4.7bn and mainly hits higher earners.
Dividend and savings taxes rising: Dividend tax and savings income tax both increase by two percentage points, reducing returns for investors holding money outside ISAs and pensions.
Drivers face new charges
Electric vehicle tax introduced: From 2028, EV drivers will pay a new 3p-per-mile tax (1.5p for plug-in hybrids) on top of vehicle excise duty. The OBR warns this could slow the shift to low-carbon transport, but the Treasury expects it to raise £1.9bn a year by 2030.
Fuel duty frozen (again): Fuel duty is frozen until September 2026, extending a 15-year freeze. It will rise with inflation after that unless the Government intervenes.
Your energy bills may fall – for now
Reeves will abolish the Energy Company Obligation (ECO), claiming it costs families £1.7bn a year but delivers little benefit.
She says bills will fall by £150 next year as the levy moves into general taxation.
However, ECO was one of the only programmes funding insulation for low-income homes. Scrapping it may reduce bills today but risks higher energy use and emissions in the long term.
Wages and benefits: some support for low earners
Minimum wage rises:
- The national living wage will increase from £12.21 to £12.71.
- Workers aged 18–20 will see pay rise from £10 to £10.85.
Good news for low-paid households, though it adds pressure to sectors already struggling with recruitment.
Two-child benefit cap scrapped: Labour’s landmark social policy move, the two-child limit on child benefit will end, costing £3bn by 2030 and lifting 450,000 children out of poverty.
Students and renters also affected
Student loan thresholds frozen: From 2027, Plan 2 student loan repayment and interest thresholds will be frozen for three years, keeping interest at 7.9 per cent and raising £400m annually.
Property and renting: Higher taxes on landlords’ income may feed through to rents, though the numbers affected are smaller than in previous years due to earlier rule changes.
What about the planet?
Despite the Government’s rhetoric on green growth, this Budget contains little new environmental ambition.
- No new investment in home insulation
- No new support for renewables or grid upgrades
- No green transport funding beyond EV taxation
- Fuel duty frozen again
- A promise to cut “red tape” for nuclear, but no clear delivery plan
There is £14m for low-carbon tech in Grangemouth and a push for nuclear, but overall the climate sits firmly behind fiscal consolidation.
