The UK Government’s Budget 2025 sets out major reforms to support households, strengthen public services, modernise taxation, and drive long-term economic growth.
Key Point Budget 2025
1. Overall Direction
The Budget focuses on reducing the cost of living, cutting borrowing, supporting economic growth, and strengthening public services, particularly the NHS. It also introduces major reforms to welfare, taxation, and investment.
2. Cost of Living Measures
- ~£150 reduction in household energy bills from April 2026 by:
- Ending the Energy Company Obligation on bills.
- Government funding 75% of legacy Renewables Obligation costs.
- Rail fares frozen for one year (2026–27) – first time in 30 years.
- Prescription charges frozen at £9.90 for one year from April 2026.
- Fuel duty: 5p cut extended to August 2026; inflation rise for 2026–27 cancelled.
- Warm Home Discount expanded to 6 million households.
- Savings expected to reduce inflation by 0.4 percentage points in 2026–27 – the largest near-term drop from policy on record.
3. Economic Outlook
- GDP growth 2025 upgraded to 1.5% (from 1% forecast in March).
- Inflation predicted to return to 2% target by early 2027.
- Employment expected to rise to 35.4 million by 2030.
- Unemployment to peak at 5% in 2026, then fall steadily.
4. Public Finances
- Borrowing falls every year of the forecast:
4.5% of GDP (2025–26) → 1.9% (2030–31). - Current budget surplus from 2028–29, meeting the fiscal rule one year early.
- Net financial debt falls as a share of GDP by 2029–30.
- Buffer against fiscal rules more than doubled to £21.7bn.
5. Welfare & Poverty
Major reforms aim to reduce inactivity and child poverty.
Welfare Changes
- Two-child limit in Universal Credit abolished, lifting 450,000 children out of poverty.
- UC rates adjusted so it no longer pays to remain off sick long-term.
- Increased face-to-face health assessments to reduce fraud and error.
- New Youth Guarantee: all 16–24-year-olds offered support to work or learn.
Motability & Overseas Pensions
- Reforms to Motability tax reliefs raising £1bn over 5 years.
- Ending ability for non-residents to buy cheap access to UK state pensions.
6. NHS and Public Services
- Additional £50bn in 2029–30 compared with earlier plans.
- £120bn in capital investment maintained – highest sustained level in 40 years.
- 250 Neighbourhood Health Centres being created.
- New efficiency targets saving £4.9bn by 2030–31 (e.g., abolishing Police & Crime Commissioners, reducing councillors).
7. Tax Measures
Fairness Reforms
Taxes increased on:
- Property income
- Dividends
- Savings income
(Reason: these sources pay no NI equivalent.)
Additional changes:
- High Value Council Tax Surcharge for homes worth £2m+.
- Salary sacrifice pension NIC relief capped to the first £2,000 from 2029.
- Employee Ownership Trust CGT relief reduced from 100% to 50%.
Modernisation
- Electric vehicle road pricing via a per-mile levy.
- Online gambling taxes raised; in-person gambling protected.
- Removal of low-value import relief to protect UK retailers.
- Preventing ride-share apps using tour-operator VAT loopholes.
8. Business & Growth Strategy
- £900m to complete the Lower Thames Crossing.
- £300m capital boost to the NHS.
- New UK Listing Relief from Stamp Duty Reserve Tax.
- Reforms to R&D system.
- Reduced business rates for retail, hospitality & leisure.
- Leeds City Fund established as 25-year retention zone.
- Government recommits to corporate tax roadmap, providing stability.
- Further planning reforms to accelerate housing and infrastructure.
9. Labour Market & Skills
Over £1.5bn committed to:
- Youth Guarantee
- Growth & Skills Levy
- Visa reforms to ensure businesses can access global talent.
10. Devolved Nations & Regional Investment
Funding allocations highlight:
- Transport
- Energy infrastructure
- Skills programmes
- City-region growth strategies
(Full details in Section 7 of the Budget – available on request.)
Conclusion
Budget 2025 delivers major reforms across welfare, tax, public services, business growth, and the cost of living. Whether you are an individual, business owner, or investor, these changes will influence financial planning for the year ahead.
For personalised guidance on how Budget 2025 impacts your tax position, income, or business strategy, expert help is essential.
At Brayan & Spencer Associates, we pride ourselves on being one of London’s most tax-efficient and proactive accounting firms. Our expert team is here to help you understand how these Budget 2025 changes affect you and to support you in making smart, informed financial decisions.
📞 Call 0207 183 5956
🌐 Visit – www.bsassociate.co.uk
