The Autumn Budget 2025: A Summary

The Autumn Budget 2025, presented by Chancellor of the Exchequer Rachel Reeves (“Chancellor”), is a momentous occasion for businesses, individuals, and the UK economy as a whole. After an accidental early release of the Budget around 40 minutes prior to the Chancellor making her formal announcement, it was confirmed that the Budget seeks to set the course for a more resilient and equitable future.

With a focus on addressing economic inequality, stimulating growth, and providing support to key sectors, the Chancellor’s proposals signal a decisive shift to attempt long-term fiscal sustainability. This article will summarise the key announcements in turn.

Economic Growth

• Gross Domestic Product (“GDP”) will grow by 1.5% in 2025, the Office for Budget Responsibility (“OBR”) forecasts, above 1% expected earlier this year.
• The Chancellor now says that the OBR is reducing expectations for productivity growth by 0.3 percentage points to 1% by the end of the forecast. The OBR says this will mean £16 billion less in tax receipts by 2030.

Business Tax

• The Chancellor has reduced the writing down allowance main rate in corporation tax.
• The Chancellor has also reduced Capital Gains Tax (“CGT”) relief on disposals to Employee Ownership Trusts, from 100% to 50%.

Property

• The new and controversial mansion tax was introduced by the Chancellor. This will be an annual charge of £2,500 for properties worth more than £2 million, and £7,500 for properties worth more than £5 million. It is said that this will be levied on owners and collected alongside council tax.
• This new surcharge will allegedly raise over £400 million by 2031 and will be charged on fewer than the top 1% of properties.
• In addition, the Chancellor has increased the tax rates on dividends, property and savings income by 2 percentage points.

General Tax

• The Budget generally raises taxes by £26 billion in 2029-30 and it is important to note that there has been no increase to Income Tax, National Insurance or VAT. This means that by the time we get to 2031, tax thresholds will have been frozen for nearly a decade.
• Gambling taxes have been reformed in that remote Gaming Duty is being raised from 21% to 40%.
• Duty on online betting is increasing from 15% to 25%, whilst no changes have been made to in-person gambling or horse-racing. Bingo Duty is also being entirely abolished from April 2026.
• The Government will also introduce "permanently lower tax rates" for more than 750,000 retail, hospitality and leisure properties. This move will be funded through higher rates on properties worth £500,000 or more, such as warehouses used by online retail giants.

Welfare and Retirement

• The Chancellor has introduced a £2,000 cap on salary sacrifice into a pension with contributions above that taxed in the same way as other employee pension contributions. These changes will come into effect in 2029.
• For 2025-2026, the maximum amount a person could put into their Individual Savings Account (“ISA”) for the tax year was £20,000. The full £20,000 allowance will remain, but £8,000 of this will now be designated exclusively for investment purposes, rather than for cash ISA’s. Over 65s, though, will retain the full cash allowance of £20,000.
• The Chancellor also announced a new electric vehicle excise duty and "this will be payable each year alongside vehicle excise duty at 3p per mile for electric cars and 1.5p for plug-in hybrids".
• This will allegedly enable the Government to double road maintenance funding in England, and offer a further £200 million for a rollout of electric vehicle charging points.
• Finally, in respect of the cost of living, £150 will be cut from average energy household bills.

Wages and Education

• On Tuesday this week, increases to minimum wage were confirmed. Workers over 21 will see a rise of 4.1% to £12.77, while workers between 18-20 will get an 8.5% rise to £10.85 from April next year.
• The Government is to fund a new "youth guarantee" which will provide £820 million over the next three years. This guarantee is designed to provide support to young people, through either a place in college, an apprenticeship or personalised job support.
• In addition, the Government has committed to providing £5 million for libraries in secondary schools and £18 million for improving and upgrading playgrounds across England.
• Training by way of apprenticeships for under 25s will be completely free for Small and Medium-sized Enterprises.

Benefits

• Finally, the two-child benefit has been scrapped from April 2026, meaning larger families can claim more means-tested benefits.

If you have any queries on how these changes might apply to you, or need advice as we approach many of these changes being enacted, our Commercial Team and other departments are ready to assist. Please contact us by email at info@leathesprior.co.uk or by telephone at 01603 610911.