The November Budget 2025 has arrived. The unexpected publication caused a buzz in Westminster and gave the public an early look at the government’s plans. This Budget introduces major tax changes, new support measures and several important reforms that will affect households and businesses across the UK.
Inflation and the Economic Outlook
The OBR expects inflation to reach 3.5% this year and fall to 2.5% next year. It also expects inflation to return to the 2% target in 2027. Alongside these figures, the OBR predicts weaker productivity growth. It links this to slower economic growth from 2026.
GDP should grow by 1.5% in 2025. The OBR had forecast stronger growth earlier in the year, yet it still sees a modest rebound. Growth then dips slightly in later years. The weaker outlook reduces expected tax revenue. The government says it will respond with targeted tax increases and careful investment decisions.
Tax Threshold Freezes
One of the most significant changes concerns income tax thresholds. The government will freeze these thresholds until 2031. As wages rise, more people will move into higher tax bands. The OBR expects 780,000 more people to pay income tax by 2029.
Employer National Insurance thresholds will also remain frozen for three extra years from 2028. This measure aims to raise revenue but also increases pressure on employers as wages rise.
Together, these freezes will push the overall tax burden to record levels. The OBR expects taxes to reach 38% of GDP by 2030.
Pension and Savings Changes
The Budget introduces new rules for pension contributions made through salary sacrifice. From 2029, contributions above £2,000 will incur National Insurance. The government says this creates a fairer system because it treats large salary sacrifice contributions in the same way as standard employee pension payments.
Savings rules will also change. The ISA allowance will stay at £20,000, but £8,000 of this allowance must now go into investments rather than cash. Savers aged over 65 can still save the full amount in cash. The government says this reform boosts long-term investment and encourages people to grow their money.
Property and Wealth Measures
The government will introduce a surcharge on high-value homes. Properties worth more than £2 million will pay £2,500 a year. Homes worth more than £5 million will pay £7,500. Fewer than 1% of homes will pay this charge. The government expects the measure to raise more than £400 million by 2031.
The government will also increase tax rates on dividends, savings income and property income by two percentage points. This change aims to raise more revenue while keeping the tax system simple.
Energy and Cost-of-Living Support
The government will scrap the Eco energy scheme in April. It argues that the scheme added extra costs to bills for many households. Ending it should cut £150 from the average household’s energy bill.
Green levies on gas and electricity will also fall. The OBR expects this change to cost £2.3 billion. The exact saving for each home will vary, but overall bills should fall.
Fuel duty will remain frozen until September 2026. The 5p cut to fuel duty will also continue for another year. These decisions aim to ease pressure on drivers.
Electric Vehicle Tax
Drivers of electric vehicles will pay a mileage-based tax from April 2028. Electric cars will pay 3p per mile, and plug-in hybrids will pay 1.5p per mile. The government says this will ensure all road users contribute fairly. The revenue will help fund improvements to road maintenance and the expansion of charging points.
Gambling Tax Reform
The Budget brings major reforms to gambling taxes. Remote Gaming Duty will rise from 21% to 40%. Duty on online betting will increase from 15% to 25%. The government expects these measures to raise more than £1 billion a year by 2031.
Bingo Duty will end in April 2026. The government says this will support local bingo halls and community venues.
Support for Families and Young People
The government will remove the two-child benefit cap from April 2026. The OBR says this will support 560,000 families. It expects each family to gain an average of £5,310 by 2029. The government describes this as a major step in reducing child poverty.
The Budget also introduces support for young people. The government will fund apprenticeship training for small and medium-sized businesses. It will also launch a youth guarantee. This guarantee will cost £820 million over three years. It will offer skills training and work support for young people entering the job market.
Public Services and Local Funding
The chancellor announced new support for schools and communities. Schools will receive £5 million to improve secondary school libraries. Councils will receive new funding for playground upgrades. The government says this will improve learning spaces and community areas.
Wider Fiscal Plans
The chancellor says she will reduce borrowing and manage debt over time. She says the Budget puts the public finances on track for a £3.9 billion surplus by 2028. She also says her new fiscal rules will support stable long-term investment.
The government has also recovered £400 million from contracts linked to pandemic waste. It says this proves its commitment to responsible use of public money.
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This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.