Chancellor Rachel Reeves delivered her second Autumn Budget to the House of Commons this afternoon, and it was one that had everyone talking. Since the Budget date was confirmed back in September, speculation has been running wild about what changes were coming.
This morning, before Rachel Reeves even stepped up to speak, she made it clear that this budget was about making cuts—but not the kind you might expect. We’re talking about cutting NHS waiting lists, debt, borrowing, and the cost of living.
So, what exactly did she announce, and how will it affect you and your business? Let’s break down the key points.
The OBR Accidentally Spoiled the Big Reveal
In a bit of an unexpected twist, the Office for Budget Responsibility (OBR) accidentally published their growth forecast half an hour early – just before noon, and before the Chancellor had even begun speaking. Talk about spoilers! The early release confirmed that this budget would raise £26bn in taxes.
Beyond the early leak, the report brought some positive news. GDP growth has been upgraded to 1.5% (up from 1%), with inflation expected to hit 3.5% before reaching the Bank of England’s 2% target by 2027. The Chancellor also confirmed that fiscal headroom has doubled to £21.7bn, giving the government more flexibility to meet debt targets.
Income Tax and National Insurance Thresholds Extended
As widely expected, the Chancellor announced changes to income tax and National Insurance thresholds. Instead of ending in April 2028 as originally planned, the freeze will now extend until April 2031- three years longer than initially anticipated.
What does this mean? The thresholds will remain at £12,570, £50,270, and £125,140, with an effective rate of tax of 60% between £100,000 and £125,140 due to the loss of the tax-free personal allowance. The impact of this known as ‘fiscal drag’ whereby more people will be dragged into paying higher rates of tax as wages increase with inflation. This freeze was first introduced by Rishi Sunak back in 2021 when he was Chancellor, and this extension means these thresholds will have been frozen for an entire decade.
National Living and Minimum Wage on the Rise
This one was announced a day early, but it’s still great news for workers. From April 2026, the national living and minimum wages are increasing across all age ranges:
- Over 21s – £12.71 (a 50p increase)
- 18–20-year-olds – £10.85 (an 85p increase)
You’ll notice the larger jump for 18–20-year-olds which is intentional. The government is working to close the gap and eventually create one single ‘adult’ rate for everyone aged 18 and over.
- 16–17-year-olds – £8 (a 45p increase)
There were concerns that these increases might lead to more young people falling into the NEET category (not in education, employment, or training), but the government has accepted the Low Pay Commission’s recommendations in full.
Corporation Tax Updates
The good news? Full expensing has been retained, and there’s a new 40% first-year allowance to help businesses write off more of their investment costs upfront.
The not-so-good news? The writing down allowance (WDA) is being reduced from 18% to 14% starting in April 2026.
Changes to Business Tax Relief
If you’re considering selling your business to an Employee Ownership Trust (EOT) – which has become increasingly popular in recent years – you’ll want to pay attention to this one.
Currently, sales to EOTs are exempt from Capital Gains Tax. However, the Chancellor has announced that this 100% relief will be cut to 50%. And here’s the kicker: this change takes effect immediately from today, so anyone currently in the process of selling their business this way will be affected.
Supporting Entrepreneurs and Fast-Growing Companies
It’s not all bad news for businesses. The government is rolling out several measures to help fast-growing companies scale up and attract investment.
Enterprise tax incentives are being expanded to cover double the number of eligible scale-ups, making it easier for them to secure funding and recruit talent during those critical growth phases.
For companies choosing to list in the UK, there’s a new three-year stamp duty reserve tax exemption on the horizon, which should improve market liquidity and make British stock exchanges more attractive. On top of that, reforms to Individual Savings Accounts (ISAs) and enhanced investment support are expected to channel around £3 billion in retail investment toward UK-listed firms.
Pension Changes on the Horizon
The anticipated ‘pension raid’ did materialise, though perhaps not in the way everyone expected. The government is introducing an annual salary-sacrifice national insurance exemption threshold of £2,000. Any contributions above this amount will be treated as ordinary employee contributions in the same way as workplace pensions, with both employee and employer subject to National Insurance contributions. Don’t panic just yet though, these changes won’t come into effect until 2029.
In more immediate pension news, the state pension will rise by 4.8% from April 2026 as part of the triple lock commitment.
ISA Reform Coming in 2027
From April 2027, we’ll see some changes to ISAs. The good news is that the £20,000 allowance is staying put. However, £8,000 of this will now be ring-fenced specifically for stocks and shares ISAs. This change reflects the fact that stocks and shares ISAs have been delivering better returns than cash ISAs in recent years.
If you’re over 65, your cash ISA allowance will remain at the full £20,000.
Electric Vehicle Tax Changes
September 2025 saw record-breaking registrations for new battery electric vehicles (BEVs), so it’s no surprise that the Chancellor had electric vehicles in her sights.
From April 2028, a new mileage-based charge will be applied to electric and plug-in hybrid cars. Battery electric cars will be charged 3p per mile, while plug-in hybrids will pay 1.5p per mile. These rates will increase annually in line with CPI.
On a brighter note, the electric car grant is being expanded and will run from 2025-26 through to 2029-30.
The ‘Mansion Tax’ is Coming
It’s been 34 years since properties were last valued for council tax purposes, and the Chancellor has finally addressed this with a new High Value Council Tax Surcharge already being dubbed the “Mansion Tax.”
Starting in April 2028, properties worth over £2 million will be subject to this surcharge, which is expected to raise £0.4 billion. The tax will be collected alongside regular Council Tax and will operate in four price bands:
- £2-2.5m properties: £2,500 per year
- Properties worth £5m or more: £7,500 per year
The good news (or bad, depending on your perspective) is that this will only affect the top 1% of properties.
Changes to Dividend, Property, and Savings Tax
Landlords were in the firing line, though not in the way many expected. Rather than targeting them with National Insurance, the Chancellor increased tax rates on income from property, savings, and dividends by 2 percentage points.
Her reasoning? To address the gap where a landlord earning £25,000 would pay £1,000 less tax than a tenant on the same salary. The Chancellor was quick to point out that 90% of taxpayers will still pay no tax on their savings.
Want to Know More?
Feeling a bit overwhelmed by all these changes? We don’t blame you! That’s why we’re hosting a rapid-response webinar tomorrow (Thursday 27th November, 12-1.15pm) where our specialist team will break down everything you need to know.
We’ll cut through the jargon, share practical strategies, and answer your questions live. It’s completely free, and if you can’t make it, register anyway and we’ll send you the recording. Spaces are limited though, so grab your spot now.
