The Budget – 26 November 2025 – Key Announcements
The government today, 26 November 2025, presented its Autumn Budget under Chancellor Rachel Reeves. The announcement outlined a wide range of measures designed to support pensioners, increase wages for lower paid workers and ease everyday costs. At the same time, the budget sets out tax rises and reforms intended to stabilise public finances and fund long term investment.
Major Changes:
State Pension Rise, Minimum Wage Increase and New Support Measures:
From April 2026, the full State Pension will rise by 4.8 per cent under the triple lock commitment. This increase will provide many pensioners with up to £575 more income each year.
The national wage will also rise. Workers aged 21 and over will see the National Living Wage increase to £12.71 per hour. Younger workers will also benefit. Those aged 18 to 20 will receive £10.85 per hour and those aged 16 to 17 along with apprentices will receive £8.00 per hour. A new Youth Guarantee will give £820m towards efforts to guarantee every young person a place in college, an apprenticeship or personalised job support. After 18 months, 18-to-21-year-olds will be offered paid work instead of benefits.
The budget also introduces several measures aimed at helping households with the cost of living. Regulated rail fares in England will be frozen for 2026 and NHS prescription charges will also remain frozen for the year. The average annual energy bill will be cut by £150 from April by reducing levies. These changes are expected to provide practical savings for millions of residents.
In a major change to the welfare system, the government will remove the two-child benefit cap from April 2026. This reform is expected to improve household incomes for many families with three or more children. This currently limits the amount of benefits parents can claim for their third child or subsequent children who were born after 6 April 2017.
Effects on Different Groups:
Pensioners will receive a clear financial boost through the 4.8% pension increase. This additional income should help offset the effects of inflation and rising living costs although, some pensioners may still feel the pressure if prices continue to rise.
Low paid and working households will gain the benefits from the increase to the minimum wage. The rise in hourly pay should help many workers manage essential expenses such as rent, household bills and savings, especially for those working full time.
Families with children stand to benefit significantly from the removal of the two-child benefit cap. This change is expected to reduce child poverty and provide a better financial stability for larger households.
The wider population will also see some relief as freezes on rail fares, prescription charges and certain energy related costs may provide modest but meaningful savings during a period of ongoing financial uncertainty.
The Trade Offs: Tax Changes, Fiscal Drag and Pension Saving Reforms:
Alongside support measures, the budget introduces several revenue raising policies. Income tax and National Insurance thresholds will remain frozen until 2031. As wages rise, more people are expected to move into higher tax bands or pay more tax overall. This effect is commonly referred to as fiscal drag.
The budget also introduces changes to pension saving arrangements. For individuals using salary sacrifice schemes to boost their pension contributions, the tax advantages are being restricted. This change will particularly affect higher earners and alters the long-term appeal of some pension saving strategies. From April 2029, national insurance will be charged on salary-sacrificed pension contributions above an annual £2,000 threshold.
The gambling industry is going to be taxed more, to raise more than £1bn. Remote gaming duty will rise to 40% from 21% while online betting tax will rise from 15% to 25%. The bingo tax is being abolished from April.
Electric car drivers will be subject to a 3p charge for every mile they drive from April 2028. Plug-in hybrid vehicles will be charged 1.5p per-mile. This is expected to raise £1.4bn, according to the OBR report.
Capital gains tax relief on business sales made to employee ownership trusts will be reduced from 100% to 50% and the tax paid on dividends – payments to shareholders – as well as property and savings income will rise 2 percentage points.
Mansion tax introduced on properties worth more than £2m means the most expensive properties in the country, worth more than £2m, will have to pay extra tax. This will be £2,500 for properties worth £2m to £2.5m and up to £7,500 for homes valued at £5m.
Additional measures include adjustments to Individual Savings Accounts, changes to savings allowances and increased taxes on certain forms of income and property. These reforms form part of the government’s broader plan to raise revenue and strengthen public finances. Savers will only be able to put up to £12,000 into cash ISAs tax-free each year. This is reduced from £20,000 in the hopes that people will instead invest their money in stocks and shares ISAs. Over 65s can retain the full £20,000 allowance.
Summary:
The Autumn Budget presented by Rachel Reeves combines immediate support for pensioners, workers and families with significant fiscal reforms. Increases to the State Pension and the minimum wage, along with freezes on key household costs, are designed to provide financial relief during a challenging economic period. However, these benefits are accompanied by higher taxes, frozen thresholds and reduced incentives for some forms of pension saving, all of which may limit the overall gains for many households.
The budget aims to balance compassion with financial responsibility. Its success will depend on how inflation, wage growth and household spending develop in the coming year, and on how people adapt to both the financial support and the new tax landscape that the budget introduces.
If you are worried about tax implications, pensions or savings for your future, please contact Find Me A Solicitor who have an expert panel for accountants and tax advisors for more advice.