The UK Budget 2025, presented by Chancellor Rachel Reeves, introduces significant tax and financial changes that will impact individuals, families, investors, landlords, and businesses across the UK. As a leading Tax Advisory Firm in London, Brayan & Spencer Associates has summarised the key announcements so UK taxpayers, especially London residents can understand how these changes may affect their finances.
This guide provides a clear, simple, and accurate breakdown of all major updates and what steps you should take next.
Key Budget 2025 Announcements at a Glance
1. Income Tax Threshold Freeze Extended
The freeze on income tax thresholds has been extended for another three years.
Impact: More taxpayers will gradually move into higher tax brackets due to rising wages (fiscal drag).
2. New “Mansion Tax” for High-Value Properties
A High-Value Council Tax Surcharge will apply to homes valued above £2 million.
- Properties over £2m: approx. £2,500 per year
- Properties over £5m: approx. £7,500 per year
Impact: Property owners in London’s prime areas will face higher annual tax liabilities.
3. Cash ISA Allowance Cut for Under-65s
The Cash ISA limit will drop from £20,000 to £12,000 for taxpayers aged under 65.
- Over-65s will retain the £20,000 limit.
- Stocks & Shares ISA limit remains unchanged.
Impact: Younger savers may need to shift to alternative tax-efficient investment options.
4. Pension Salary-Sacrifice NI Charge
From 2029, only the first £2,000 of salary-sacrifice pension contributions will remain NI-free.
Impact: High earners using salary sacrifice will face higher NI costs.
5. Higher Tax on Dividends, Savings & Property Income
Tax rates on:
- Dividend income
- Savings interest
- Rental income
will increase by 2 percentage points.
Impact: Landlords, investors, and company directors will see reduced post-tax returns.
6. EV Mileage Tax From 2028
New charges coming into effect:
- EVs: 3p per mile
- Plug-in hybrids: 1.5p per mile
Fuel duty will remain frozen until next year.
Impact: EV running costs will increase for both private and business vehicle owners.
7. Minimum Wage Increase
The National Living Wage and young workers’ minimum wage rates will rise from April.
Impact: Higher earnings for workers; increased payroll cost for businesses.
8. Basic & New State Pension Rise
The State Pension will increase by 4.8%.
Impact: Better income protection for pensioners.
9. Two-Child Benefit Cap Scrapped
From April next year, families will no longer be restricted to claiming benefits for only two children.
Impact: Increased financial support for larger households.
10. Tax Changes for Online Betting & Gaming
- Remote Gaming Duty increased to 40%
- Online betting duty increased to 25%
Impact: Online gaming operators and consumers may experience increased costs.
11. Additional Financial Measures
- £150 average reduction in household energy bills
- Increased funding for apprenticeships
- “Luxury car tax” threshold raised to £50,000
- New investment for EV charging, education, NHS, and devolved governments
Who Will Be Most Affected?
London Homeowners
The new mansion tax will especially impact London’s high-value property owners.
Landlords & Property Investors
Higher tax on rental income reduces overall returns.
Savers Under 65
Lower Cash ISA allowance means reduced tax-free savings space.
High Earners
Salary-sacrifice pension changes will reduce NI efficiency.
Investors & Directors
Dividend tax increases will affect those taking income from investments or companies.
EV Owners & Fleet Operators
New mileage taxes will affect long-term cost planning.
What Should UK Taxpayers Do Now? — Expert Advice
✔ 1. Review Income & Payroll Structure
Plan ahead to avoid bracket creep from the tax threshold freeze.
✔ 2. Reassess pension contributions
Salary-sacrifice strategies may need restructuring before changes take effect.
✔ 3. Optimise Savings & Investments
Under-65s may benefit from shifting more into Stocks & Shares ISAs or diversified investment portfolios.
✔ 4. Property Tax Planning
High-value property owners in London should reassess their tax exposure under the new surcharge.
✔ 5. Landlord Tax Review
With rising rental income tax, landlords should strategically plan allowances, deductions, and ownership structures.
✔ 6. EV Cost Planning
Businesses with EV fleets should revise financial forecasting to include future mileage charges.
Why Choose Brayan & Spencer Associates?
As a trusted Tax Advisory Firm in London, we specialise in helping individuals, landlords, and businesses navigate complex tax changes with clarity and confidence.
We offer:
- Property tax advisor London expertise
- Accounting service London for individuals & companies
- Dedicated Tax Advisers in London for compliance & tax optimisation
- Full-service Tax and Accounting in London
- Strategic planning for high-value property owners, investors & entrepreneurs
- Personalised tax reviews to minimise liabilities under Budget 2025
Our team provides clear, proactive guidance tailored to London taxpayers’ needs.
Conclusion
The UK Budget 2025 introduces major changes that will impact nearly every taxpayer. Whether you’re a homeowner, landlord, employee, investor, or business owner, it’s important to understand how these updates affect your financial situation — and what steps you can take to stay ahead.
Brayan & Spencer Associates is here to help you navigate these changes with expert advice and practical tax planning.
📞 Need personalised tax advice?
Contact Brayan & Spencer Associates, your trusted Tax Advisory Firm in London, for initial consultation call at 0207 183 5956 or visit www.bsassociate.co.uk.
Frequently Asked Questions (FAQ) – UK Budget 2025 (Rachel Reeves)
Q1: What did the OBR announce about UK growth forecasts?
The Office for Budget Responsibility (OBR) downgraded the UK growth forecast by 0.3 percentage points, reflecting slower expected economic growth over the coming years.
Q2: How has the UK fiscal headroom changed?
The government has doubled the fiscal headroom to £22 billion by 2029–30, providing more flexibility for spending and investment decisions.
Q3: Are income tax thresholds changing?
The freeze on tax thresholds has been extended by three years, meaning personal allowances and higher-rate thresholds will remain the same until 2031.
Q4: What is the new mansion tax announced?
A new annual surcharge will apply to high-value properties:
- £2,500 on homes over £2 million
- £7,500 on homes over £5 million
This will impact owners of luxury properties, particularly in London.
Q5: What changes are there to child benefits?
The two-child benefit cap will be scrapped from April, allowing families with more than two children to receive full benefits.
Q6: How has the Cash ISA limit changed?
For taxpayers under 65, the Cash ISA limit is being reduced by £8,000, while over-65s retain the full allowance.
Q7: Will fuel duty change?
No. Fuel duty will remain frozen until next September, providing stability for motorists.
Q8: What is the change to salary-sacrifice pension contributions?
Salary-sacrifice pension contributions above £2,000 per year will now be subject to National Insurance, reducing tax efficiency for high earners.
Q9: Are pensions and minimum wages increasing?
Yes:
- Basic and new state pension rates will rise by 4.8%
- Minimum wage will increase by 4.1%, with 6–8.5% increases for younger workers
Q10: What support is provided for households?
- £150 average cut to household energy bills from April
- Public funding includes £5m for secondary school libraries and £18m for playground improvements
Q11: Are there changes for electric vehicles?
- Mileage tax for EVs will be introduced from April 2028
- £200m investment to boost EV charging infrastructure
- Luxury car tax threshold increased to £50,000
- £1.3bn extra funding for electric car grants
Q12: Are there changes to VAT or transport apps?
Yes, the VAT discount for ride-hailing apps has been cut, affecting transport and mobility services.
Q13: How is funding distributed across UK nations?
- £370m to Northern Ireland Executive
- £505m to the Welsh Government
- £820m to the Scottish Government
- £13bn funding allocated for seven mayors
Q14: Are there changes to student loans and inheritance tax?
- Student loan repayment threshold frozen for three years
- Inheritance tax now allows transfer of 100% relief allowance between spouses
Q15: Are there changes to gambling and gaming duties?
- Remote gaming duty raised to 40%
- Online betting duty increased to 25%
