Listen to Episode 529
This week, we dig into the Budget to uncover the hidden changes the mainstream media missed. We also explain how the biggest announcements, including the new mansion tax and the new electric vehicle tax, will work in practice, before revealing the biggest winners and losers.
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Ep 529 - Autumn Budget 2025 - Full summary
Savings & ISA Changes
Summary
We reveal the major changes to savings allowances announced in the budget. The headline news is that the thresholds for income tax and National Insurance has been frozen until April 2031. The other big announcement is a reduction in the Cash ISA allowance for those under 65, designed to encourage investment in the stock market. We also discuss the permanence and expansion of the Help to Save scheme.
Key insights
- Frozen thresholds: Income tax and National Insurance thresholds have been frozen for a further three years until April 2031, continuing the "stealth tax" on earnings.
- Cash ISA cuts: From April 2027, the Cash ISA allowance for under-65s will be reduced from £20,000 to £12,000. The remaining £8,000 of the overall ISA allowance must be used for investments.
- Protection for older savers: The full £20,000 Cash ISA allowance will remain for those aged 65 and over to ensure they have access to liquid cash in retirement.
- Help to Save expanded: The scheme, which offers a 50% bonus for low-income savers, has been made permanent and eligibility will be expanded to all Universal Credit claimants from April 2028.
Tax Hikes: Dividends, Property and Salary Sacrifice
Summary
In this section, we discuss the tax increases that will impact investors, landlords, and high earners. We explain how the new property tax rates will work, the introduction of a "mansion tax" for high-value homes, and the new cap on salary sacrifice contributions which could cost pension savers
Key insights
- Savings and Dividend Tax Rises: From April 2026, dividend tax rates will increase by 2 percentage points for the 'ordinary' and 'upper' rate tax bands. From April 2027, savings interest tax will also rise by 2 percentage points across all bands.
- New Property Tax: A separate tax rating for property income (rent) will be introduced from April 2027, effectively adding a 2% surcharge to current income tax rates for landlords.
- Mansion Tax: A new annual surcharge will apply to residential properties worth over £2 million from April 2028, ranging from £2,500 to £7,500 per year.
- Salary Sacrifice Cap: From April 2029, a £2,000 cap will be placed on the amount of salary sacrifice pension contributions that are exempt from National Insurance, potentially costing higher earners an extra £500 a year.
Travel & Working from home
Summary
We look at the future of driving with the introduction of a pay-per-mile tax for electric vehicles (EVs) and the latest changes to fuel duty. We also highlight the "hidden" budget items that didn't make the headlines, such as the scrapping of tax relief for working from home.
Key insights
- EV Pay-Per-Mile: From April 2028, EV drivers will pay 3p per mile (1.5p for hybrids). This will be managed via an annual mileage check, potentially costing the average driver £255 a year.
- Fuel Duty: The 5p cut has been extended to August 2026, but a fixed timeline is now in place to gradually reverse this and return rates to pre-2022 levels by March 2027.
- Rail Fares Frozen: Regulated rail fares have been frozen for the first time in 30 years, though this does not apply to all ticket types.
- WFH Relief Scrapped: The tax relief for employees working from home (worth up to £6 per week) will be abolished from April 2026.
Resources
Links referred to in the podcast:
- Sign Up To The MTTM Weekly Newsletter
- Autumn Budget 2025 roundup – Key points at a glance
- Salary sacrifice to be capped at £2,000 per year from 2029
- Income tax thresholds to be frozen until April 2031 as ‘stealth tax’ continues
- Dividend, property and savings tax rates to increase by 2%
- New ‘Mansion tax’ costing up to £7,500 a year announced in the Budget 2025
- Cash ISA allowance to be cut for some – we explain who will be affected and how
- 5 Budget announcements you might have missed
- New pay-per-mile tax introduced for electric vehicles
- Two-child benefit cap scrapped – what it means for families
- £150 to be cut from energy bills as green levies scrapped
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