Summary
- Chancellor Rachel Reeves delivered her Autumn Budget speech in the House of Commons on Wednesday, 26 November
- The OBR’s forecast was accidentally leaked in a “technical error” prior to the Budget’s announcement, which Reeves said was “deeply disappointing”
- A range of tax hikes were announced as Reeves attempts to balance the books
- The chancellor cut the cash ISA limit from £20,000 to £12,000 per year for under 65s, from April 2027
- She also confirmed a £2,000 cap on National Insurance contributions relief for pension contributions made through salary sacrifice
What was announced in the Autumn Budget? | Autumn Budget winners and losers
That concludes our live coverage of the Budget – one of the most eventful we can remember. We will continue unpacking what the Budget will mean for you, so keep a close eye on the MoneyWeek website. Sign up to the MoneyWeek newsletter to get the top stories delivered directly to your inbox.
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Starmer told Sky News today: “We kept to our manifesto in terms of what we promised but I accept the challenge that we've asked everybody to contribute."
Freeze on income tax thresholds could cost taxpayers £1,300
The government's extension to a freeze on income tax thresholds could add an extra £1,292 to someone's tax bill by 2031.
Someone with a yearly income of £15,000 today faces stumping up an extra £259 over the three years between 2028 and 2031, according to analysis by AJ Bell.
Someone on £45,000 a year will take a hit of £683, while a taxpayer with an annual income of £47,000 will have to fork out an extra £1,292.
Laura Suter, head of personal finance at AJ Bell, said: "While it’s a nifty way for the government to raise money, the cumulative effect of the freeze means people are seeing their tax bills rise dramatically when compared to a system in which thresholds had increased by inflation each year."
Has the Budget cleared the path for UK stocks?
UK-listed stocks gained yesterday in the wake of the Budget and the OBR forecast. The FTSE 100 gained nearly 0.9% and the FTSE 250 – which is more exposed to the UK economy as it contains more small, domestically-focused companies compared to the large multinationals of the FTSE 100 – gained 1.2%.
“Expectations running into the budget were very low, sentiment very weak, and valuations of especially domestic and smaller companies in the UK [were] very suppressed,” said Richard Knight, portfolio manager at Merchants Trust.
Rate cuts would be “a significant positive stimulus for the UK economy and stock market” according to Knight. “We are seeing great opportunities in midcaps in particular, as they are over-sold, and sensitive to the pessimism around the UK, a great degree of which is priced-in to market valuations,” he added.
OBR: New per mile EV tax will significantly slow sales
The government’s new 3p per mile tax on fully electric vehicles will mean hundreds of thousands fewer electric cars will be on UK streets by 2030/31 than expected, according to analysis by the Office for Budget Responsibility (OBR).
The new levy, which will come into effect in April 2028, will mean average drivers of fully electric cars could pay an extra £225 a year to the taxman. A reduced rate of 1.5p per mile will be paid by those with plug-in hybrid cars.
The UK’s fiscal watchdog said they expect the tax to raise around £1.1 billion in the 2028-29 tax year, and £1.9 billion in the following tax year.
However, they added that the measure is “likely to reduce demand for electric cars” as it increases the average lifetime cost of running an EV.
Melanie Lane, chief executive of EV charging provider Pod, said the policy “will shake consumer confidence and potentially jeopardise investment in the sector at a critical moment”.
Lane added: “We are already falling behind on the ZEV mandate that expects one in three cars sold to be zero-emissions next year and confirmation of additional mileage costs from 2028 will penalise motorists and manufacturers who are fulfilling their end of the bargain.”
Details of how the policy will be policed are yet to be published, but the government has started a consultation. They say they expect mileage to be self-reported, possibly at a car’s annual MOT.
Savers at risk of paying more tax as cash ISA cut and savings tax rate to be hiked
Millions of savers may face paying more tax on their savings in coming years, due to the chancellor’s cut to the cash ISA allowance.
From April 2027, under 65s will only be able to put £12,000 a year into a cash ISA, rather than the current £20,000 per year limit.
7.1 million people put money in a cash ISA in 2022/23, with just over two million (28%) putting more than £12,000 into this type of account, analysis by InvestEngine shows.
These two million savers could now face paying tax on savings interest once they exceed their personal savings allowance, if they continue saving above the new £12,000 cash ISA limit.
Savers who are 65 or older can continue putting up to £20,000 – the overall ISA allowance – into a cash ISA, if they wish to.
The personal savings allowance lets basic rate taxpayers earn £1,000 in savings interest outside of an ISA. The allowance is cut to £500 for higher rate taxpayers. Additional rate taxpayers don’t get a personal savings allowance.
The tax rate on savings income will rise by two percentage points across all bands from April 2027, meaning basic rate taxpayers will need to pay a 22% levy on savings interest above the personal savings allowance – unless the money is in a tax-free savings vehicle, such as an ISA or Premium Bonds.
If a basic rate taxpayer put £12,000 in a cash ISA, and held £8,000 – the difference between £20,000 and the new £12,000 limit – in a top non-ISA savings account, they would face having paid hundreds of pounds in tax after five years, analysis suggests.
Year | Total held outside ISA | Annual interest (4.5%) | Taxable interest (beyond £1,000) | Tax due (20%) | Cumulative tax paid | Tax due (22%) | Cumulative tax paid |
|---|---|---|---|---|---|---|---|
1 | £8,000 | £360 | £0 | £0 | £0 | £0 | £0 |
2 | £16,000 | £720 | £0 | £0 | £0 | £0 | £0 |
3 | £24,000 | £1,080 | £80 | £16 | £16 | £17.6 | £17.6 |
4 | £32,000 | £1,440 | £440 | £88 | £104 | £96.8 | £114.4 |
5 | £40,000 | £1,800 | £800 | £160 | £264 | £176 | £290.4 |
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “For committed savers, that want to continue saving more than £12,000 into a cash ISA, investing their money in the financial markets is one solution, provided they don’t need access to their money in the short term.”
The overall ISA allowance remains at £20,000, meaning if you maximise the cash ISA allowance, you could still put £8,000 into a stocks and shares ISA in the same tax year.
Haine added: “Equities have historically delivered higher real returns – that beat inflation – than cash over the long term.”
A time horizon of at least five years is recommended for investing in equities via a stocks and shares ISA.
Jessica Sheldon, deputy digital editor
Inheritance tax thresholds frozen until 2031
The IHT nil-rate band has been frozen at £325,000 and the residence nil-rate band is held at £175,000. It means families risk paying more IHT in the future as the value of assets rises.
Sarah Coles, head of personal finance at the investing platform, said yesterday: "Nobody likes the idea of the taxman dipping into your pockets after you’ve died, so today’s news won’t be welcome."
Rachel Reeves defends extension to tax threshold freeze
“I recognise that freezing thresholds does mean that we are asking ordinary people to contribute a bit more,” Reeves told BBC News today.
The chancellor said she had “kept the contribution to a minimum by changes elsewhere” and acknowledged that continuing the threshold freezes would impact working people.
“I’m not seeking to deny that," she added, "but I believe I made the fair and necessary choices yesterday to ensure we can cut the cost of living, cut NHS waiting lists and also reduce our debt and borrowing and hopefully give space to the Bank of England to cut interest rates further.”
Good morning and welcome back to MoneyWeek’s 2025 Autumn Budget coverage.
Chancellor Rachel Reeves delivered a wealth of tax hikes in yesterday’s speech.
As well as targeting wealthy homeowners with a new mansion tax (effective from April 2028), the chancellor extended the freeze on income tax thresholds by three years. She also capped National Insurance contributions relief on salary sacrifice into pension schemes to £2,000. The latter measure will come in from 2029.
Thank you for joining us
So, there we have it. Rachel Reeves has unveiled the 2025 Autumn Budget, increasing taxes by around £26 billion, according to the Office for Budget Responsibility (OBR).
Recap: the Autumn Budget headlines
Here’s a quick recap of some of the major headlines that have come out of today’s Autumn Budget announcement:
- Mansion tax to apply to properties valued at over £2 million
- Cash ISA limit cut to £12,000
- Salary sacrifice on pension contributions limited to £2,000 before National Insurance payments kick in
- Higher tax rates on income from property, savings and dividends.
Of course, there are plenty of holes to pick in the specific measures that Reeves has taken. Not everyone is going to be happy when an extra £26 billion in taxes are announced.
As MoneyWeek’s digital editor Kalpana Fitzpatrick says, when considering the Budget’s winners and losers Reeves seems to have taken pains to ensure that the most financially vulnerable are shielded, and those that can pay will pay.
And the markets seem encouraged. The extra fiscal headroom has seen government borrowing costs fall markedly through today, while the FTSE 250 has gained nearly 1%.
What do you think about Reeves’s Budget?
Over to you – what do you think about the announcements today? Have your say by voting in our poll below.
How much did the Budget raise taxes by?
Thanks to a slew of tax hikes, the chancellor will now have £26 billion more in tax revenue in 2029/30, according to the OBR, bringing the tax take to an all-time high of 38% of GDP in 2030/31.
The biggest chunk of this comes from the extension of the freeze on income tax thresholds until 2031, raising £8.3 billion in 2029/30.
The charging of National Insurance on salary sacrificed pension contributions is estimated to bring in around £4.7 billion in 2029/30. Increases to income tax rates on property, savings, and dividends will bring in a further £2.1 billion in 2029/30.
A twist in the cash ISA limit shake-up
Rumours of a cash ISA allowance as low as £4,000 swirled earlier this year – a significant drop from the current £20,000 annual ISA limit. A limit three times the size, £12,000, had been trailed more recently.
Today, chancellor Rachel Reeves announced just that – savers can put no more than £12,000 a year into a cash ISA from 6 April, 2027. This limit is within the £20,000 annual ISA allowance. Crucially, the new rule only applies to under 65s.
The limit will supposedly encourage savers to invest more of their money, hopefully boosting the UK’s struggling stock market. I’m sceptical. Two-thirds (62%) of savers said they would not switch to a stocks and shares ISA if the cash ISA limit were to be reduced, according to a survey of 1,400 cash ISA savers by Paragon Bank. I believe improved financial education is the best way to get Britain investing more.
The average amount subscribed to a cash ISA in the 2023/24 tax year was just shy of £7,000 per person, HMRC figures show, so many savers may not be affected by the limit anyway. That said, a freeze on income tax thresholds – which has now been extended to 2031 – and an upcoming hike to the tax rate on savings income (from April 2027), means the ISA, which shields your savings and investments from tax, is going to become even more important in the future.
Reeves announced a plot twist in the Budget though – savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year. It means pensioners can avoid taking investment risk as they enter retirement. I am really pleased to see this exception to the reform – particularly as some pensioners may need to sell their home to pay for care. They can continue putting up to £20,000 a year into a cash ISA, rather than having to put a chunk in stocks and shares, to shield their money from the taxman.
Lifetime ISA reform?
Currently, savers can add £4,000 per year into a LISA and get a 25% bonus on top from the government, up to a maximum of £1,000 a year. Any savings must be used to put down a deposit for a house that costs £450,000 or less or for retirement, otherwise you pay a 25% penalty.
However, the savings product has its critics, with some arguing the £450,000 limit for a house is not high enough for people buying in areas where property prices are above the UK average, such as London.
The £450,000 limit has also been frozen since the LISA was launched in 2017, despite house prices growing significantly since then.
Autumn Budget summary
Well there you have it. No rabbit in the hat though. The Autumn Budget started in an unusual way as the Office for Budget responsibility leaked its report a whole 20 minutes before the chancellor’s speech.
Here’s a quick summary:
- Cash ISA reforms. For cash savers, savings will be limited to £12,000. To take advantage of the full £20,000 allowance, you will have to invest the rest. Over 65s will see no change and keep the full £20,000 allowance.
- Salary Sacrifice pensions capped. There will be a £2,000 salary sacrifice cap confirmed - the amount of earnings that can be exchanged for pension contributions that benefit from a National Insurance exemption.
- Mansion Tax. Owners of properties worth over £2 million will have to pay a recurring annual charge on top of their current council tax. There will be four price bands with the new ‘High Value Council Tax Surcharge’ rising from £2,500 for a property valued in the lowest £2 million to £2.5 million band to £7,500 for a property valued in the highest band of £5 million or more, all uprated by CPI inflation each year.
- Tax hike on income from property, dividend, and savings by two percentage points. The change will affect all taxpayers. But she claimed 90% of taxpayers will still pay no tax at all on their savings.
- Income tax threshold freeze extended, from 2028 to 2031.
- People based abroad will no longer be able to make Class 2 National Insurance contributions.
- Two-child benefit cap to be lifted, which Reeves said will help tackle child poverty
- Electric vehicle (EV) grant extended to 2030, but EVs will be subject to new 3p per mile tax.
- Energy bills to drop by £150 from April 2026 as green levies cut.
Kalpana Fitzpatrick, digital editor
Care leavers guaranteed up to £13,500 in student loan support
All care leavers, young people who have left the care system, will be guaranteed the full student maintenance loan amount of £13,500 per academic year.
The government says this is often due to financial barriers – the new loan guarantee will seek to address this issue.
Hundreds more planners to get Britain building
The government will pump £48 million of additional funding into recruiting an extra 350 planners in England.
Benefits fraud: Plans to save over £1 billion on benefit fraud and error
Fraudulent benefit claims cost the government £6.5 billion in the 2024/25 financial year, with £5.2 billion made up of fraudulent Universal Credit claims.
It comes as the DWP aims to keep a lid on the ballooning welfare bill, with forecasts predicting health and disability benefits will cost the government £70 billion by the end of the decade.
Administrative burden for pensioners on just state pension to be eased
No concrete method for implementing this has been confirmed yet, but the government says it is “exploring the best way to achieve this and will set out more detail next year”.
Deutsche Bank: ‘Cost of living’ Autumn Budget increases headroom and reduces borrowing
Zooming out, today’s Autumn Budget – despite seeing the third-largest amount of tax increases since 2010 – appears to achieve three things, according to Sanjay Raja, chief UK economist at Deutsche Bank.
Firstly, it should keep government borrowing on a downward trajectory. “The UK’s budget deficit is expected to drop from 4.5% of GDP to 3.5% next fiscal year,” says Raja. “It is expected to drop to just under 2% of GDP by the end of the decade.”
Secondly, it has surprisingly doubled the chancellor’s fiscal headroom from £10 billion to just under £22 billion.
Thirdly, Raja expects the Budget to be disinflationary. “Budget policies are projected to reduce CPI by 0.4 percentage points in 2026/27,” says Raja. “This is reflected by a partial extension of the fuel duty freeze, reducing green levies, and a one-year freeze to rail fares.”
Kemi Badenoch: Budget is a “total humiliation” and Reeves should resign
She opened her speech by calling the Budget a “total humiliation” and slammed the chancellor for “coming back for more” taxes.
She said: “Last year, she put up taxes by £40 billion, the biggest tax raid in British history. She promised that she wouldn't be back for more. She swore it was a one-off. She told everyone that from now on, it would be stability, and she would pay for everything with growth. Today, she has broken every single [promise].
“If she had any decency, she would resign,” she added.
Reeves to cut energy bills by £150 by ending green levies
The chancellor has announced that the average annual energy bill will be cut by £150 from April 2026 onwards.
This will be done by removing the “Eco scheme”, a green levy added to energy bills, first introduced by the Conservatives.
State pension to increase by 4.8%
Those on the full new state pension will see their weekly payments go up from £230.25 to £241.30 (£12,547 a year) under the triple lock mechanism – a rise of more than £550 per year.
The full basic state pension weekly amount will go up from £176.45 to £184.91 (£9,615 a year) – an increase of just under £440 a year.
Because the new tax year starts on 6 April 2026, you won’t get the new rate until your first pay date after this date.
Rail fares to be frozen for the first time in 30 years
Rail fares will be frozen at current levels for the first time in 30 years, meaning all regulated rail tickets, including season tickets, peak returns, and off–peak returns, will remain the same price next year.
The Treasury says the freeze could save commuters on more expensive routes upwards of £300 a year, assuming they commute to the office three times a week.
Reeves confirms no change to income tax
It was widely trailed before the Budget but Reeves has now confirmed herself that income tax – as well as the other two ‘big three’ taxes – won’t be raised (beyond the extension to the income tax threshold freeze).
“I can confirm that I will not be increasing National Insurance, the basic higher or additional rates of income tax or VAT,” said Reeves.
“I have kept everyone's contribution as low as possible through reforms to make our tax systems stronger, closing loopholes, ensuring that the wealthiest pay their share, and building a tax system that is fairer,” she added.
Electric vehicle grant extended
After announcing the new set of EV taxes, the chancellor eased the pain slightly by extending the UK’s new electric car grant until 2030.
The grant currently subsidises the price of a new EV by between £1,500 and £3,750 depending on the model.
EVs to be subject to new 3p per mile tax
It is estimated that the new tax will cost the average driver of a fully electric car approximately an extra £250 a year.
Cash ISA cuts – pros and cons
Cuts to the annual cash ISA allowance was shaping up to be one of the most divisive policies ahead of the Autumn Budget. Reeves appears to have struck something of a compromise by cutting the annual allowance to £12,000, but exempting over-65s who, understandably, may want to take fewer short-term risks with their money.
“This is a carefully considered solution that promotes the benefits of investing in the stock market for the long term, whilst addressing concerns of older savers who prioritise financial certainty,” said Richard Stone, CEO, Association of Investment Companies.
But Harriet Guevara, chief savings officer at Nottingham Building Society, calls the cut to the cash ISA limit “a deeply disappointing outcome for both savers and lenders”.
“We support the government’s aim to boost an investing culture in the UK,” she added, “but restricting choice is not the way to do it.”
£2,000 salary sacrifice cap confirmed
Chancellor Rachel Reeves has confirmed plans to introduce a £2,000 cap on the amount of earnings that can be exchanged for pension contributions that benefit from a National Insurance exemption.
Introducing the cap could reportedly raise up to £2 billion a year but it will have an impact on the amount employees can save into a pension from their post tax income, ultimately affecting their take-home pay if they want to continue putting money into their workplace scheme.
AJ Bell has previously warned that the pensions of higher earners could be £50,000 smaller due to the salary sacrifice changes.
Steve Hitchiner, chair of the tax Group at the Society of Pensions Professionals (SPP) said: “Restricting salary sacrifice for pensions will affect the take home pay of millions of employees – especially basic rate taxpayers – and is a tax on working people, in spirit if not in name. It is also another sizeable cost to employers and, perhaps most importantly its restriction will reduce pension saving.”
Mansion tax confirmed for £2 million homes
Rachel Reeves has confirmed details of a new mansion tax for homes worth £2 million and above.
From April 2028, owners of properties identified as being valued at over £2million by the Valuation Office (in 2026 prices) will have to pay a recurring annual charge on top of their current council tax.
There will be four price bands with the High Value Council Tax Surcharge rising from £2,500 for a property valued in the lowest £2 million to £2.5 million band to £7,500 for a property valued in the highest band of £5 million or more, all uprated by CPI inflation each year. This measure is estimated to raise £0.4 billion in 2029-30.
Tom Bill, head of UK residential research at Knight Frank, said: “Until the revaluations take place, buyers and sellers face years of uncertainty, especially around the £2 million threshold. Even once completed, new valuations can be challenged, which would prolong the limbo.
“The policy may also raise less than expected, especially because it is deferrable. If opposition parties say they would scrap it, many homeowners will look at the opinion polls and wait it out. When you factor in the cost of carrying out the valuation and the potential lost stamp duty revenue from a stickier market, the sums raised could look like a rounding error for the Treasury.
“More properties will inevitably get dragged into the mansion tax net, which means the proportion of terraced houses, flats and semi-detached homes will grow over the years, particularly in the capital. The term ‘mansion tax’ will increasingly feel like a misnomer.
“Overall, it feels like politics has trumped economics. One the one hand, the policy is designed to keep backbenchers happy and ensure the near-term survival of the chancellor and prime minister. On the other hand, it throws a spanner into the works of the housing market for not much money in return, which is important in the context of a Budget where spending is front-loaded. The UK already pays the highest percentage of property taxes among OECD countries.”
Tax hike for property, dividend, and savings income to rise
“Even after these reforms, 90% of taxpayers will still pay no tax at all on their savings,” she added.
Reeves extends income tax threshold freeze
The move means workers will pay more tax when their salaries increase, as more of their pay is dragged into higher tax bands, leading some to label it a ‘stealth tax’.
She said: “The previous Conservative government froze personal tax thresholds from 2021 to 2028 and today I will maintain all income tax and equivalent National Insurance thresholds at their current level for a further three years from 2028.
“I know that maintaining these thresholds is a decision that will affect working people. I said that last year, and I won't pretend otherwise. Now, [...] I'm asking everyone to make a contribution.”
Band | Taxable income | Tax rate |
|---|---|---|
Personal Allowance | Up to £12,570 | 0% |
Basic rate | £12,571 to £50,270 | 20% |
Higher rate | £50,271 to £125,140 | 40% |
Additional rate | over £125,140 | 45% |
Source: HMRC
Income tax bands are different in Scotland.
Tax thresholds have historically risen with inflation, meaning workers paid tax on the same proportion of their earnings in real terms each year.
However, since the 2022 tax year, thresholds have been frozen at their 2021/22 levels. This raises tax receipts through a phenomenon known as ‘fiscal drag’.
The government had previously stated this freeze would end after the 2027/28 tax year, but today’s announcement means fiscal drag will continue for longer than expected.
Figures from HMRC recently showed that in the last year alone, more than a million Brits were dragged into higher tax bands because of the threshold freeze.
Daniel Hilton, writer
250 new Neighbourhood Health Centres to be built
The government is set to open 250 new ‘Neighbourhood Health Centres’ in the country to help improve healthcare access.
The government hopes that opening the new centres will cut NHS waiting lists and “bring an end to the postcode lottery of healthcare access”.
Carrot and stick approach to ISAs
Cash ISAs will be limited to £12,000, and if you want to take advantage of the full £20,000 allowance then you will need to invest the rest.
This isn’t quite as bad as the ‘cut’ we anticipated, and it still leaves savers with a choice.
But this will still require some convincing and education. I’ll also be interested in knowing how this would work in practice, and will we see new ISA products launched? Possibly, yes.
Gilt yields swing following pre-Budget leak
Gilt yields – in effect, the interest paid on UK Government debt – initially fell following the leak of the OBR’s report.
But they have since risen back to above their level before the leak – now standing at 4.52% as of 12.44pm.
Overall, though, gilt yields are little changed from before the OBR forecast’s release.
“We’ve seen a relatively orderly reaction in gilts and the pound to the details of the budget so far,” said Matthew Ryan, head of market strategy at Ebury. “Market participants will be breathing a sigh of relief that the chancellor appears to have learnt from past mistakes, and will instead be affording herself a larger fiscal headroom in excess of £20 billion, as opposed to the razor-thin one we saw last year.”
Chancellor’s £5 million books boost for secondary schools
The chancellor announced a £5 million funding package that will allow all secondary schools across the country to spend around £1,400 each on books, incentivising children to get off their phones and read instead.
Chancellor announces multi-million playground makeover
Local communities are set to receive an £18 million funding package to help revamp their playgrounds.
The funding will target 200 children’s play parks across England in a bid to “breathe new life into play areas across England, creating safe, exciting spaces for thousands of children”.
OBR downgrades productivity growth forecast
The OBR has downgraded their forecasts for productivity growth. The downgrade will cost the economy £16 billion.
Stamp duty holiday for London IPOs
In a bid to use her Autumn Budget to boost the UK’s beleaguered stock market, Reeves has announced a three-year exemption from stamp duty for companies listing on the London Stock Exchange (LSE).
The LSE has struggled to attract high-profile companies to list on the exchange even when they are based in the UK. Unilever’s anticipated spin-off of its ice cream business will see Amsterdam land the primary listing, while neobank Revolut – Europe’s most valuable private company following a funding round that valued it at $75 billion – appears to favour listing in the US over the UK.
“This would make buying British more enticing for investors and help redress some businesses’ concerns about demand for UK shares,” said Emma Wall, chief investment strategist at Hargreaves Lansdown. “London has been losing out to New York in recent years, as businesses favour the funding and regulatory environment of the New York Stock Exchange.”
Revolut may favour an IPO in New York over London, but Rachel Reeves' Autumn Budget could lure other companies towards the UK by slashing stamp duty on newly-listed stocks.
Cash ISA limit cut to £12,000 – but not for over 65s
The annual cash ISA allowance will be reduced from £20,000 to £12,000 from April 2027 as the chancellor bids to push savers towards the stock market. However, over 65s will retain the full cash ISA allowance.
The overall allowance of £20,000 per year isn’t changing, so savers will still be able to spread their money across multiple ISA accounts up this limit.
Leaked OBR report ‘deeply disappointing’ and a ‘serious error’, says Reeves
She said: “This is deeply disappointing and a serious error on their part. The Office of Budget Responsibility have already made a statement taking full responsibility for their mistake.”
Reeves begins 2025 Budget speech
Reeves has begun her Budget speech. Much of the chancellor’s Budget has been reported ahead of this speech, after the OBR report was published in error earlier today. Reeves called it a “serious error” on the OBR’s part.
Pension savers to be hit with salary sacrifice cap
An Office for Budget Responsibility forecast, published in error and seen by BBC News, suggests the Autumn Budget will introduce a £2,000 cap on the amount of earnings that can be exchanged for pension contributions that benefit from a National Insurance exemption. This will come in from April 2029, according to the OBR.
Should we have had Budget leaks?
I am seriously thinking of getting my ears checked – at 12:05 I heard the Prime Minister Keir Starmer say details will be released “in 25 minutes” yet a few minutes soon after he said that it seems like the Office for Budget Responsibility then leaked its report to various media outlets, including the BBC.
OBR apologises for leaking forecast early
The OBR has apologised for leaking its forecast ahead of Rachel Reeves’s Autumn Budget announcement.
A statement on the OBR’s website reads:
“A link to our Economic and fiscal outlook document went live on our website too early this morning. It has been removed.
“We apologise for this technical error and have initiated an investigation into how this happened.
“We will be reporting to our Oversight Board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again.
“Our Economic and fiscal outlook and supporting documents will be released when the Chancellor has finished her speech.”
OBR downgrades growth predictions
The Office for Budget Responsibility (OBR), the UK’s independent budget watchdog, has degraded its GDP growth forecast, according to the BBC.
OBR: Inflation to be higher than expected in 2025 and 2026.
Inflation is set to be 3.5% in 2025, according to the BBC, based on the OBR’s early leaked report.
Government fiscal headroom will grow to £22 billion
The early release of the OBR’s report suggests the chancellor will increase the government’s ‘fiscal headroom’ to £22 billion, up from its current level of £10 billion, the BBC reports.
Two-child benefit cap lifted
The two-child benefit cap, which limits the amount of Universal Credit families can receive, will be lifted, according to the BBC. The OBR has reportedly estimated this will cost £3 billion by 2029/30.
New tax to be levied on electric vehicle drivers
Electric vehicle (EV) drivers are set to pay a new tax for each mile they drive, according to the OBR’s leaked report, as reported by the BBC.
The complete details have not yet been confirmed, but the report says the new mileage-based charge will be “around half the fuel duty rate paid by drivers of petrol cars (raising £1.4 billion)".
MoneyWeek has approached the OBR for confirmation that the forecast has been leaked early, and apparently by accident. As yet, we have not received a reply.
Reeves extends ‘stealth tax’ until 2030, breaking previous commitment
The freeze on income tax thresholds has been extended until 2030, according to the BBC. The organisation has reportedly obtained an early copy of the OBR’s budget report seemingly in error.
Mansion tax to be introduced on £2 million homes
The Office for Budget Responsibility appears to have confirmed plans for a mansion tax on homes worth £2 million and above.
But critics will likely label it a levy on London and the South East, where most £2 million homes are situated.
A mansion tax could also cause a freeze at the top-end of the property market. Rightmove data shows sales agreed for £2 million-plus homes are already down 13% year-on-year.
Prime Minister’s Questions is underway in the House of Commons. Prime minister Keir Starmer will answer questions from MPs for around half an hour. Chancellor Rachel Reeves should then take to the dispatch box soon after, to deliver the 2025 Autumn Budget speech.
What are the chancellor’s fiscal rules?
You may hear a lot of references to ‘fiscal rules’ in the chancellor’s speech and the surrounding commentary today.
They are entirely self-imposed, but the Office for Budget Responsibility (OBR), the UK’s official budget watchdog, calculates whether the government will meet them or not.
Rule 1: “The current budget should be on course to be in balance or surplus by 2029/30” (‘stability rule’).
Rule 2. “Net financial debt should fall as a share of the economy in 2029/30” (‘investment rule’)
Public debt is defined as public sector net financial liabilities, or ‘net financial debt’.
Rule 3. “Some types of welfare spending must remain below a pre-specified level” (the ‘welfare cap’)
This rule adds constraints on roughly half of government welfare spending. It requires total annual welfare spending in this parliament to be at a maximum level of £194.5 billion by 2029/30.
The margin for overspend is 5%. Pension payments and welfare that are ‘most sensitive to the economic cycle’ (like Jobseekers’ Allowance) are excluded from the cap.
What economic circumstances is Rachel Reeves contending with?
It is no secret that today’s budget will be delivered under some difficult economic circumstances.
Amid these dreary figures, the chancellor reportedly faces a £22 billion black hole in the public finances, according to estimates by the Institute for Fiscal Studies (IFS), an influential think tank.
It means the chancellor must find an extra £22 billion just to stick to previous commitments for government spending, while keeping her fiscal headroom at £10 billion.
As the chancellor’s rules stop her from increasing borrowing to meet day-to-day government spending, this budget shortfall will need to be filled by either cutting expenditure or raising taxes.
A pedestrian walks past a painting of Rachel Reeves by political satire artist Kaya Mar, along a street in central London ahead of the Autumn Budget
Will the two-child benefit cap be lifted?
The chancellor could look at lifting the two-child benefit cap today – a move which charities say would lift hundreds of thousands of children out of poverty.
FTSE 100 on the rise ahead of Autumn Budget
But for the FTSE 100 and bonds market, it’s been more of a joyous morning as stocks and bonds rise with the budget set to draw a line under months of speculation and uncertainty for businesses.
Ten-year UK gilt yields – in effect, the return the government promises to pay buyers of its debt – opened higher this morning at around 4.52%, but have since fallen back to around 4.5%. Bond yields move in the opposite direction to prices.
Reeves leaves Downing Street
Chancellor Rachel Reeves has left Number 11 Downing Street to deliver the 2025 Autumn Budget. She will make the long-awaited speech at around 12.30pm in the House of Commons, after Prime Minister's Questions.
Balancing the books in the Autumn Budget
The Autumn Budget is, first and foremost, an exercise in balancing the national books. Rachel Reeves has an added challenge on this front as, during last year’s election campaign, the Labour party pledged to not raise any of the “big three” taxes on working people (income tax, (employees’) national insurance and VAT).
Labour’s fiscal rules also commit the government to fund day-to-day spending entirely through revenue as opposed to borrowing by the 2029/30 tax year.
“Chancellor Reeves will want to show a materially higher fiscal consolidation in the Autumn Budget of close to £30 billion, likely extending the headroom against the fiscal rules closer to £15 billion,” said Reto Cueni, chief economist at private bank Syz Group.
Achieving this will require tax increases, and Reeves will likely target ‘non-inflationary’ areas such as tax threshold freezes or reducing capital gains tax exemptions.
“Further tax hikes are a foregone conclusion. Some, including another freeze to the income tax thresholds, are as good as fully priced in by markets,” said Matthew Ryan, head of market strategy at Ebury.
“It will be key for the government to show that over the next two years the budget deficit will be reduced and the UK’s debt burden will finally move down,” said Cueni. “By reducing the fiscal deficit over the next two years, the government can regain fiscal credibility and assure investors that the UK’s government is keeping control of the debt situation.
“This would relax tensions in the gilts market and let yields grind lower,” Cueni added.
The lost art of a budgetary tipple
Drinking on the job is probably not allowed in your workplace and, despite the many bars nestled within the Palace of Westminster, is usually forbidden in the House of Commons for politicians – that is, apart from in one circumstance.
When were the longest and the shortest Budget speeches?
Spare a thought, then, for some of Parliament’s honourable Victorian members who listened to the longest uninterrupted Budget speech in history in 1853.
The marathon address was given by then chancellor William Ewart Gladstone, who spoke for around four hours and 45 minutes. Such lengthy speeches were characteristic of the four-time Liberal prime minister – he was notable for often giving speeches of up to five hours without a break when he campaigned in Midlothian.
William Ewart Gladstone's First Home Rule Bill
Gladstone’s opposite in almost every sense was the Conservative politician Benjamin Disraeli, Gladstone’s political arch-rival with whom he traded the premiership of the UK across decades.
It is perhaps fitting that Disraeli holds the opposite Budget record, delivering the shortest Budget in history in 1867, lasting just 45 minutes.
That is not to say that Disraeli was not susceptible to speaking at length. When including Budgets with interruptions, Disraeli holds the record for the longest speech, lasting five hours, though this included a break.
Daniel Hilton, junior writer
Could we see exemptions to stamp duty on shares in the Autumn Budget?
One of Reeves’s many headaches in the Autumn Budget today is finding a way to reinvigorate London’s long-suffering stock market.
The London Stock Exchange (LSE) has seen some of the UK’s biggest companies, such as AstraZeneca and Wise, seek new listings overseas this year. There is a not-unjustified perception that UK-listed companies suffer from low valuations, especially in comparison to US-listed counterparts.
“If this Budget rumour proves accurate, it may be the carrot British businesses need to plump for a domestic listing,” said Emma Wall, chief investment strategist at Hargreaves Lansdown.
Rachel Reeves may announce a pause on stamp duty for shares newly listed in London at today's Autumn Budget
Reeves is also expected to announce other measures aimed at encouraging Brits to start investing, including a potential cut to the annual cash ISA allowance in order to encourage investments into stocks and shares ISA.
Dan McEvoy, senior writer
Farmers protesting in Westminster ahead of Autumn Budget
Tractors are assembling outside the Houses of Parliament this morning ahead of the Autumn Budget, in protest against a move that Reeves brought in last year to remove inheritance tax relief above £1 million for farms and rural businesses.
Tractors assemble outside the Houses of Parliament ahead of the Autumn Budget this morning.
“Whilst much of the focus has been on the anticipated new policies being announced today, tractors in Downing Street again this morning illustrate the impact that is still being felt in rural communities around the changes announced last year to Agricultural Property Relief,” said Hannah Wallbridge, senior associate at regional law firm Gardner Leader.
The changes, which critics argue will force the breakup of smaller, family-owned farms, will take effect in April 2026.
“Unless further changes are announced today, the clock continues to run for those farming families to seek estate planning advice,” said Wallbridge.
Dan McEvoy, senior writer
Reeves: 'Britain won’t return to austerity’
Ahead of her Budget speech today, the chancellor has said she will take "the fair and necessary choices" to deliver on the Government’s mandate for change.
In a video, Reeves said: “I’m not going to return Britain back to austerity. Nor will I lose control of public spending, more reckless borrowing.”
She added: “I will take action to help families with the cost of living…cut hospital waiting lists…cut the national debt."
What will be in the 2025 Autumn Budget?
Reeves will deliver the Budget speech today at around 12.30pm, after Prime Minister’s Questions.
Some details have already been announced – such as an increase to the national living wage and national minimum wage next year, and an extension of the freeze to NHS prescription charges.
How do you feel about the Autumn Budget?
We want to hear from you – how are you feeling about today’s Budget? Vote in our poll below.
MoneyWeek’s Budget wishlist
That’s all from us this evening – we will be back tomorrow morning for live coverage of Budget Day.
Before we sign off, the MoneyWeek team has shared what they’d like to see in the Budget.
"Leave pensions alone"
“We should be encouraging people to put more into their pensions, not less. Capping salary sacrifice for pension contributions sends the wrong signal, especially when the government wants more people to invest.
"Last year’s decision to include unused pension funds for inheritance tax purposes from April 2027 has already removed an incentive for pension saving. I think the government should leave pensions alone.”
“Cut stamp duty on shares”
“Much has been made of the chancellor’s wish to revive the UK’s stock market and to get Brits investing again. Reeves could kill two birds with one stone by ditching, or cutting, stamp duty on shares of UK-listed companies.
"The levy brought in £3.2 billion in the 2023/24 tax year, down 15% from the previous year. It’s not a huge money-maker, and a cut could encourage both foreign and domestic investment into the UK stock market – perhaps encouraging some of that elusive economic growth Reeves is searching for.”
"Cut VAT on energy bills and raise dividend allowance"
“If the chancellor really wants to put more money in people’s pockets, she could go a long way by removing VAT from energy bills. This would save people money, particularly during the winter when energy bills typically rise.
"Additionally, if the chancellor wants to boost investment in financial markets, raising the dividend allowance would make income paying stocks more attractive and boost entrepreneurship by giving limited company owners more tax-efficient ways to draw income that can then be spent in the economy, driving growth.”
"Raise LISA property price restrictions and tie them to inflation"
“Many young people regard the Lifetime ISA (LISA) as a joke. I am among them.
“The prospect of a savings account that can give you up to an extra £1,000 a year from the government to help you save for a house sounds appealing – but that’s until you look at the fine print.
“LISA savers can only use their savings to either save for retirement or to put down a deposit for a house that costs £450,000 or less. If you withdraw the cash for anything else, you pay a penalty.
“That £450,000 limit is more than enough to get you going in some parts of the country – school friends of mine have bought homes in my native Lancashire using it already.
“But for Londoners the LISA is laughable. The average cost of a London house was £661,329 over the last year, according to Rightmove, over £200,000 more than the LISA restriction limit.
“To fix this, I would love to see the chancellor raise the LISA property price restrictions to be in line with average property prices in the local area, and tie them to inflation. Better yet, she could abolish them altogether. Such a measure would make home ownership in the capital a much more realistic prospect for future me, and for many others in my position.”
‘Raise the annual ISA allowance’
“The annual ISA allowance has been sitting at £20,000 since 2017/18 and has been frozen at this level until 2030. While the government said it will remain at this level until at least 2030, I think it is a shame. If Reeves wants to encourage people to invest in a bid to boost the economy, then she needs to add to the tax incentive, not take it away.
"It does make me think though, was the British ISA, entertained by the Conservatives, such a bad idea after all? Perhaps a bigger incentive for those who invest in a stocks and shares ISA could be a better way to boost the economy than a cut to the cash ISA?”
‘Increase income tax by 2p and lower National Insurance by 2p’
“The chancellor's plans to raise income tax rates by 2p and lower National Insurance (NI) by 2p, while being unpopular, would have been one of the most cost-effective ways of drumming up more money.
“Calculations by the Institute for Fiscal Studies estimate such a move would have raised £6 billion, albeit stinging pensioners, landlords and the self-employed who do not pay employee NI.
“People think that we're overtaxed in the UK, but we're actually taxed as a percentage of our wages less than our counterparts in most other major European countries, according to analysis by Tax Policy Associates, an independent tax think tank.”
Thank you for joining us for our 2025 Autumn Budget preview. Please join us again tomorrow morning as we prepare to hear what the chancellor will announce.
National Living Wage and National Minimum Wage to rise
From 1 April 2026, the NLW will rise by 4.1% to £12.71 per hour for eligible workers aged 21 and over.
This will increase the gross annual earnings of a full-time worker on the NLW by £900, benefiting around 2.4 million low-paid workers, the Treasury said.
The NMW rate for 18 to 20-year-olds will also increase by 8.5% to £10.85 per hour.
This will mean an annual earnings increase of £1,500 for a full-time worker, and marks further progress towards the government’s goal of phasing out 18-20 wage bands and establishing a single adult rate.
The NMW for 16 to 17-year-olds and those on apprenticeships will increase by 6% to £8 per hour.
What do we know about the Budget so far?
Reeves is extending the freeze on NHS prescription charges next year, saving patients in England around £12 million, the government said.
A single prescription will remain at £9.90 and three-month and annual prescriptions prepayment certificates will also be held at the current level for 2026/27.
The chancellor is also set to confirm the state pension will rise by 4.8% during tomorrow’s speech, affecting 13 million pensioners.
Find out what we know so far about Rachel Reeves’s 2025 Autumn Budget in our guide.
Soft drink levy extended
Health and Social Care Secretary Wes Streeting said: "The levy has already shown that when industry cuts sugar levels, children’s health improves. So, we’re going further.
“A healthier nation will mean less pressure on our NHS, a healthier economy, and a happier society.”
The government expects the changes to raise £40 million to £45 million per year in extra tax receipts, once introduced on 1 January 2028.
Help to Save scheme set to be expanded
Help to Save offers a 50% boost on savings in the scheme – giving eligible savers a potential government bonus of £1,200 over four years.
The best and worst case scenarios for the financial markets
What’s the best and worst we can realistically hope for in the Budget, and how might the markets respond?
“Arguably the best case scenario for financial markets would be the unveiling of more rosier than expected projections for both UK growth and productivity, and a smaller fiscal gap than previously feared,” says Matthew Ryan, head of market strategy at global financial services firm Ebury.
But the chances of things panning out this way don’t seem strong.
“We are bracing for some curveballs,” says Ryan. “Investors will be on high alert for any unexpected tax increases, and the risk of both higher borrowing forecasts and further above-inflation spending hikes.”
“A more growth friendly budget would have the opposite effect, as easing bets in favour of MPC cuts would amplify upside in the pound,” says Ryan.
Will the cash ISA limit be cut?
Reeves is set to cut the annual cash ISA limit to £12,000 in the Autumn Budget, the Financial Times reports.
There is currently an overall £20,000 annual allowance for ISAs – this can be split across different types of ISA. For example, you could put £5,000 into a cash ISA and £15,000 into a stocks and shares ISA in a tax year, or you could use the whole annual allowance by putting £20,000 into a cash ISA if you wanted.
In March, Reeves said she was seeking to “get the balance right between cash and equities to earn better returns for savers” and “boost the culture of retail investment” in the UK.
Meanwhile, Dame Meg Hillier, chair of the Treasury Select Committee, said now isn’t the right time to cut the cash ISA allowance. She added: “Instead, the Treasury should focus on ensuring that people are equipped with the necessary information and confidence to make informed investment decisions.”
The average amount saved into a cash ISA in 2023/24 was less than £7,000 per person, HMRC figures show, suggesting a £12,000 limit might not have a dramatic impact on most people.
“For many families, young professionals and pensioners, the full £20,000 allowance may be out of reach, but the principle that they can build a risk-free cash buffer against a volatile world without worrying about future tax changes still matters.”
“Taken together, this feels less like a coherent plan to boost long-term investment and more like a quiet raid on those who are trying to do the right thing,” French said.
“By leaning on frozen thresholds and a lower cash ISA limit, the government is quietly raising revenue off the back of diligent savers, when it should be encouraging responsible financial decisions and a healthier savings and investment culture.”
What time is the Autumn Budget?
Rachel Reeves will deliver the Autumn Budget in the House of Commons on Wednesday (26 November) at around 12:30pm, after Prime Minister’s Questions.
What has Rachel Reeves said about the Budget – and what could be announced?
She promised a Budget “for growth with fairness at its heart… and a Budget that supports businesses – to create jobs and to innovate”.
However, it’s widely expected that a slew of tax hikes will be announced tomorrow.
It was rumoured Reeves was considering raising income tax rates by 2p, and cutting National Insurance by the same amount, in a move which could raise £6 billion, according to think tank the Resolution Foundation.
Good afternoon and welcome to MoneyWeek’s Autumn Budget live report. Chancellor Rachel Reeves is due to announce her 2025 Autumn Budget at lunchtime tomorrow, Wednesday 26 November. We will be covering the announcements as they happen, as well as bringing you reaction and analysis.