Key take-aways from Budget 2025

 
Taxes & income thresholds

• The government froze income tax and National Insurance thresholds until 2030–31, meaning many people will be dragged into higher tax bands over time even without a raise.
• There was no rise in headline rates of income tax, VAT or National Insurance.
• Taxes on dividends, savings, and property income rise — aimed at higher earners.

New / increased levies & “wealth taxes”

• A new “high-value” council tax surcharge (often dubbed a “mansion tax”) will apply from 2028 to homes worth over £2 million (and higher still for those over £5 million).
• From 2028 there will also be a per-mile tax on electric and hybrid vehicles.

Welfare, benefits and social support

• The government is removing the “two-child benefit cap” — meaning benefit support for larger families will be restored.
• From April 2026: energy bills for households are targeted to be reduced — the Budget promises a £150 average cut.
• Other support: increases in minimum wage/National Living Wage, rises to benefits like Universal Credit, and protections for essential costs (e.g. freezing certain charges) are part of the package.

Spending & public investment

• The government has protected a large increase in departmental capital spending — over £120 billion — signaling major investment across public services and infrastructure.
• There is increased funding for welfare, social services, and support for vulnerable groups (e.g. children, disabled households) — reflecting a shift in focus from austerity to social support.

Broader economic & fiscal strategy

• The government forecasts higher tax receipts and aims to use this “headroom” to fund spending — but there is still uncertainty around long-term pressures such as cost of living, education, and social care.
• To ease cost-of-living pressure, the Budget combines selective support (benefits, energy bill relief) with structural tax changes (threshold freezes, targeted levies) rather than broad tax rises.