Delivered by Chancellor Rachel Reeves on 26th November, the 2025 Autumn Budget brings a mix of new changes. We’ve gone through the details, and here are some changes that you’ll want to keep a close eye on.
The good news first: Stamp Duty remains unchanged for main-residence buyers. The government reaffirmed its commitment to boosting housing supply through new towns and social housing projects. A positive long-term signal for the property market. Plus, the state pension and minimum wage will see modest increases, and some energy-related levies will be reduced.
We’ve also seen the Budget freeze income tax thresholds. This means many people will gradually pay more tax as wages rise. ISA allowances will be reduced in 2027, dividend tax rates are increasing, and pension salary-sacrifice benefits will be capped from 2029.
However, there are shifts. From 2028, a new High-Value Council Tax Surcharge (referred to as a “mansion tax”) will see properties between £2m and £2.5m pay about £2,500 per year, rising to £7,500 per year for homes worth £5m or more.
For landlords, tax on rental income will increase. From April 2027, property income will be taxed at a higher rate. “Basic rate” property income is now taxed at 22%, and higher/additional rate income is taxed at 42% or 47%. These changes could squeeze returns on buy-to-let properties. Prompting some investors to rethink holding rental portfolios or to increase rents to offset the rise in tax.
Budget 2025 Scenarios: What It Might Mean for You
Working Household (Middle Income – £38,000 salary)
Profile: Employed, no rental property, modest savings, pension via workplace scheme, saving for a deposit, aiming to buy their first home in the next 12–24 months.
- Frozen tax thresholds mean pay rises push more income into the higher-tax band over time.
- ISA allowance drops to £12,000 in 2027 → less tax-free savings room.
- Pension salary-sacrifice NI benefit capped at £2,000 a year, reducing total tax efficiency.
- No change to Stamp Duty for primary residences.
- Stable interest rates make mortgage planning easier, though affordability tests remain stricter than pre-2021.
Overall: A mixed picture — deposit saving becomes harder, but mortgage costs and buying conditions remain steady, and more homes are (slowly) coming onto the market. For first-time buyers, the key is planning early and using every tax-efficient tool available to build a strong deposit.
Landlord / Property Investor (Higher earner – £70,000 salary + £12,000 rental profit)
Profile: One rental property, interest-only mortgage, relies on rental income to supplement earnings.
- Rental income tax rate rises to 42% (higher rate) from April 2027.
- That extra 2% tax costs them roughly £240 more per year on a £12,000 rental profit.
- If they own a higher-value property portfolio, other costs may rise (e.g., council tax revaluation in 2028).
- Mortgage rates may stabilise, but affordability tests remain tight.
Overall: Still profitable but net yields shrink. Many landlords will reassess if keeping the property is worthwhile — especially when combined with rising maintenance costs.
Retiree or Near-Retiree (Mixed savings & investments)
Profile: State pension + £9,000 dividend income + ISA savings.
- Dividend tax rises 2%, meaning someone with £9,000 dividend income may pay around £180–£280 more per year depending on their tax band.
- Cash ISA limit cut to £12,000, reducing long-term tax-free sheltering capacity.
- State pension rises (approx 4.8% uplift), adding around £500/year, which helps offset the rising taxes.
Overall: Small increase in regular income from the pension, but tax on investments rises. Managing savings and tax wrappers becomes increasingly important.
If you’ve been on the fence about purchasing or refinancing, this moment might be a good one to review. Especially considering long-term costs, not just purchase price. As ever, good advice and long-term planning remain key. If you like, we can run a “what this means for you” stress-test based on the value of your home and whether it’s owner-occupied or rental.
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