The Chancellor of the Exchequer, Rachel Reeves, delivered her second Autumn Budget under the Labour government on 26 November 2025.
Speculation has been mounting for months about what will come out in the Budget, so it can be easy to feel confused or overwhelmed by the amount of information out there.
To help, we’ve summarised the key takeaways from the Autumn Budget 2025 – and what it means for you, your pension and plans for later life.
Key takeaways from the Autumn Budget 2025
- Salary sacrifice
- ISA reforms
- Freeze in income tax thresholds
- Two-child benefit cap lifted
- National Living Wage increased
What is the Autumn Budget 2025?
It’s an official speech where the Chancellor updates Parliament on the state of the UK economy.
It’s when important decisions are announced that could impact your finances – including announcements about changes to tax, pensions, or government spending.
How does it affect me?
The Autumn Budget 2025 is broadcast publicly. It’s worth taking a look at its key takeaways as it could affect the way you budget for – and fund – your plans for later life.
How does it affect my pension?
As confirmed in the Budget, the State Pension Triple Lock remains in place. The full new State Pension will increase by 4.8% in April 2026, in line with earnings growth and over 1% above inflation.
However, there are still several ways that the Autumn Budget could affect your pension and plans for retirement. Here are our key takeaways:
1. Salary sacrifice
Annual salary sacrifice pension contributions above £2,000 will face National Insurance charges, from April 2029.
This means that, from 2029, many employees will lose the extra boost they’re currently getting to their pensions where their employer passes on its National Insurance savings.
Salary sacrifice is a tax-efficient way for you to make pension contributions. Find out more about what salary sacrifice is in our article.
2. ISA reforms
From April 2027, the amount which under 65s can pay into a cash ISA each year will be limited. The full cash allowance of £20,000 will stay the same for over 65s, though.
For under 65s, this means that the annual tax-free allowance in cash ISAs will be reduced from £20,000, to £12,000. You can put up to £12,000 in cash ISAs, but the remaining £8,000 will be for investment ISAs, like Stocks and Shares ISAs, and/or a Lifetime ISA, for example.
Annual subscription limits will stay at £20,000 for Stocks and Shares ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until April 2031.
However, the government is expected to publish a consultation in early 2026 on the introduction of a new ISA product to support first time buyers. This will be offered in place of the Lifetime ISA.
An ISA is a tax-free savings account where you don’t have any personal liability to income tax or capital gains tax on the income or growth you earn from investing.
3. Freeze in income tax thresholds
Income tax thresholds will remain frozen in England, Wales and Northern Ireland for a further three years until 2031. These thresholds will remain frozen for both employees and those who are self-employed.
This means that, even if your pay goes up, you could end up paying more tax because the tax bands aren’t changing. More people might move into higher tax brackets, and many could see their tax bills increase over time.
4. Two-child benefit cap lifted
The two-child benefit cap (within Universal Credit) will be lifted from April 2026.
The cap, which stops parents from claiming certain benefits for more than two children, will be scrapped next year.
This means that parents will be able to claim benefits for more than two children, helping more families get financial support.
5. National Living Wage increase
The Budget confirmed that National Living Wage will be increased next year, giving a pay rise to 2.4 million low-paid workers.
From April 2026, the National Living Wage will rise by 4.1% to £12.71 an hour to all eligible workers aged 21 and over.
For 18 to 20-year-olds, it will increase by 8.5% to £10.85 an hour. Plus, for both 16 to 17-year-olds and those on apprenticeships, the National Living Wage will increase by 6% to £8 an hour.
In summary
The Autumn Budget 2025 introduces changes that could affect your pay, benefits, and savings.
By understanding these updates – like tax thresholds, benefit caps, and wage increases – it could help you plan your finances, with your future in mind.
- All figures have been taken from the Autumn Budget 2025 report, printed by the House of Commons on 26 November 2025, and were accurate the time of writing.