On the 26th of November, Chancellor Rachel Reeves announced Labour’s second Autumn Budget. She set out the Government’s plans for tax and spending over the next year as well as projections for the future.  

Prior to the Budget there were many rumours relating to tax free cash on pensions, reduced pension allowances, and removal of the seven-year gifting rule for inheritance tax. All of these failed to materialise, instead we have a budget which will incrementally bring more people and assets into taxation by stealth due to the freezing and extension of tax threshold limits. 

There were however, some announcements that will have an effect on clients, including; reduction of the allowances for new contributions to Cash ISAs, an increase of tax rates on savings interest and dividends, reduced scope for National Insurance savings on earnings by way of salary sacrifice on pensions and new taxation on property income. 

We don’t see any immediate cause for panic for our clients. Indeed, we are aware that many are comfortable paying tax. However, these developments do give scope for further consideration of your planning come your next financial review.  

We’ve summarised the points that we feel will be most important to you. 

Tax 

Income tax rates will not change, and the annual allowance will remain frozen at £12,570 until 2030. This is an extension of three more years since last year’s Autumn Statement. This should help raise a further £8 billion in tax revenue. 

The Inheritance Tax (IHT) nil rate band will also be frozen for an extra year to 2030. 

A council tax surcharge will be applied to properties worth over £2 million. The surcharge will be £2,500 per annum for properties over £2 million and £7,500 per annum for properties over £5 million. This is set to raise £400 million in tax revenue. This only applies to properties in England. 

Corporation tax will stay capped at 25%. 

There were no announced changes to Capital Gains Tax (CGT) rates. 

Taxation of income from assets 

It was announced that income from property, dividends and savings income would increase. This was to narrow the gap between tax paid on work and that paid on income from assets. 

From April 2027, there will be a separate tax rate for property income of 22%, 42%, and 47% for income in the basic, higher, and additional rates respectively. 

There will be an increase of 2 percentage points to the ordinary and higher rate of dividend income, with no change to the additional rate. This will be effective from April 2026.  

From April 2027, the tax rate on savings income will also increase by 2 percentage points across all bands. Note that investment and savings income is taxed with reference to UK income tax bands – not those which apply to earned income in Scotland.  

National Insurance 

The National Insurance threshold for England, Wales and Northern Ireland is frozen until 2031. The Scottish Government sets its own thresholds which should be announced at the Scottish Budget in January. 

Fuel Duty and Transport 

The fuel duty cut of 5p a litre for petrol and diesel has been extended until the end of August 2026. From April 2027, fuel duty rates will be updated annually based on inflation. 

A new vehicle duty will be applied to electric and hybrid vehicles. The charge will be mileage based and will come into force in April 2028. It is expected that the average EV driver will be set to pay around £240 per year. 

There will be a further £200 million investment in electric vehicle charging infrastructure. 

Benefits and State Pension 

The state pension will rise by 4.8% a year and more for people on the new state pension. This is higher than the current rate of inflation and is in line with the triple lock policy. 

The two-child benefit cap within Universal Credit and Child Tax Credit will be removed from April 2026. 

Pensions and Savings 

The £20,000 cash ISA limit will be changed to £12,000 from April 2027. This is to encourage savers to invest the leftover £8,000 in stocks and shares ISAs. This change does not apply to savers who are aged over 65. 

Lifetime ISAs are designed to help people aged 18 to 39 to buy their first home or to save for retirement. The Chancellor has set out plans to replace this scheme with a consultation due to be published in early 2026. 

Currently it is possible to sacrifice part of your salary to your pension without paying National Insurance or Income Tax. From April 2029, this will be capped at £2,000. 

Energy 

The previous government’s Energy Company Obligation system will be axed which Reeves claims will save £150 per annum off average energy bills. 

The £150 Warm Home Discount will be expanded to reach a further 3 million low-income households. 

The Energy Profits Levy on oil and gas companies will continue through to 2030. 

Chancellor Reeves has promised to cut red tape holding back investment in nuclear power. 

The government has also published its North Sea future plan which allows new offshore fossil fuel projects, providing they are linked to existing fields. 

Devolved Governments 

In Scotland, there will be £14 million for low carbon technologies in Grangemouth, £20 million to renew infrastructure in Inverclyde and £20 million to redevelop Kirkcaldy Town Centre and seafront. 

There will be an additional £370 million for the Northern Ireland Executive, £505 million for the Welsh Government and £820 million for the Scottish Government.