Get a clear, factual summary of the UK Autumn Budget 2025. See all confirmed tax changes, new rates, dividend tax increases, property surcharges, pension reforms, business support and cost-of-living updates.
Budget 2025 Summary – Key Facts, Tax Changes & What’s New
Published 26 November 2025 | Based on the official HM Treasury Budget 2025 document
The UK Government delivered the Autumn Budget 2025, announcing major changes to dividend tax, investment income, property surcharges, pension salary-sacrifice, and cost-of-living measures.
Quick Summary of Budget 2025 (At a Glance)
- Dividend tax rises by 2 percentage points (new rates below).
- Savings and rental income tax rise by 2 percentage points from 2027.
- New High-Value Property Surcharge on homes worth £2m+.
- Salary-sacrifice pension tax benefit capped at £2,000 from 2029.
- National Living Wage rises to £12.71 from April 2026.
- EV Mileage-Based Tax (From 2028) 3p per mile charge on fully electric cars and 1.5p per mile on plug-in hybrids.
- State Pension increases by £575 per year.
- Rail fares, prescription charges and fuel duty frozen.
- Two-child benefit limit abolished.
- Over £120bn of capital investment confirmed.
1. Personal Tax & Household Support – Budget 2025 Key Measures
National Living Wage 2026
- Increases to £12.71 per hour from April 2026.
State Pension Rise
- Triple Lock maintained.
- Up to £575/year increase from April 2026.
Energy Bills
- Average household energy bills expected to fall by ~£150 from April 2026.
Freezes for 2026/27
- Rail fares – frozen for 12 months.
- NHS prescription charges – frozen.
- Fuel duty – freeze extended to August 2026.
2. Tax on Dividends, Savings & Rental Income – Confirmed Increases
Dividend Tax Rates (From April 2026)
Dividend tax increases by 2 percentage points.
Dividend Tax Rates
| Tax band | Old | New |
| Basic rate | 8.75% | 10.75% |
| Higher rate | 33.75% | 35.75% |
| Additional rate | 39.35% | 39.35% (unchanged) |
- Dividend Allowance remains £500.
Savings & Rental Income Tax (From April 2027)
Income tax on savings and rental property increases by 2 percentage points.
New Rates
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
3. Property Measures – High-Value Property Surcharge
New High-Value Property Surcharge
- Applies to residential properties valued above £2 million.
- Annual surcharge; rate bands to be set out in the Finance Bill.
4. Pension & Salary-Sacrifice Changes
Salary-Sacrifice Pension Reform (From April 2029)
- Only the first £2,000 of salary-sacrifice pension contributions qualifies for favourable NIC treatment.
5. Business, Corporate & Investment Measures
Public Capital Investment
- Government confirms over £120 billion for transport, housing, green energy, and digital infrastructure.
R&D Framework Reform
- R&D tax relief modernised; full details to follow in Finance Bill 2026.
Business Rates
- Targeted reliefs aimed at regeneration zones and northern city-regions.
Electric Vehicle Mileage-Based Tax (From 2028)
- Budget 2025 confirms a new 3p-per-mile charge on fully electric cars and 1.5p-per-mile on plug-in hybrids.
- This will be in addition to existing annual road taxes / Vehicle Excise Duty (VED).
- The scheme is intended to offset the loss in fuel duty revenue as more drivers switch to EVs.
- The exact structure of how mileage will be recorded (pre-paid annual mileage estimate? pay-as-you-go?) is not yet final – consultation and further legislation expected
VAT & Customs Updates
- VAT relief removed for low-value (£135) imported parcels.
- VAT rules tightened for digital service providers and overseas sellers.
6. Welfare & Social Policy Changes
Abolition of the Two-Child Limit
- The two-child limit in Universal Credit & Tax Credits is abolished.
Youth Guarantee
- Funded programme ensuring work, training or education for 16–24-year-olds.
Growth & Skills Levy
- New levy replacing previous apprenticeship funding arrangements.
7. Public Services & Departmental Budgets
Departmental Savings
- Departments must deliver efficiency savings between 2028–29 and 2030–31.
NHS, Education & Justice
- Existing funding settlements maintained.
8. Fiscal & Economic Outlook
Growth
- GDP growth forecasts for 2025 revised upwards.
Productivity
- Productivity forecasts revised downwards, reducing expected revenues by £16bn (by 2029–30).
Borrowing & Debt
- Borrowing targets maintained.
- Debt to fall as a share of GDP within five years.
FAQs – Budget 2025
1. What are the biggest tax changes in Budget 2025?
Dividend tax rises, savings and rental income tax increases, the new high-value property surcharge, and pension salary-sacrifice reforms.
2. How does Budget 2025 affect dividend income?
Dividend tax increases by 2 percentage points, taking rates to 10.75%, 35.75% and 39.35%.
3. What is the new UK property surcharge?
A new surcharge applies to residential properties valued above £2 million.
4. What are the new income tax rates for savings and rental income?
22%, 42% and 47% from April 2027.
5. What cost-of-living support is included?
Energy bills projected to fall by £150, rail fares frozen, and prescriptions frozen.
