Budget 2025 at a glance
A comprehensive look at the Chancellor’s key tax changes, spending measures and economic forecasts — and how they will affect the UK in the year ahead
Chancellor Rachel Reeves has unveiled the long-awaited 2025 Budget, outlining a sweeping package of tax rises, benefit reforms and targeted investment. The announcement follows an early accidental publication of the Office for Budget Responsibility’s (OBR) analysis, which confirmed that fiscal pressures remain severe and that growth expectations have been downgraded.
Below are the key measures announced across tax, pensions, benefits, housing, energy, defence and more.
TAXES
Tax thresholds frozen until 2031
Tax thresholds will be held for an additional three years from 2028 — meaning more earners will drift into higher tax bands as wages rise.
- This measure is expected to raise £8bn.
Higher taxes on gambling
Remote gaming duty rises from 21% to 40%, while online betting tax increases from 15% to 25%.
- More than £1bn will be raised.
- Bingo tax will be abolished in April.
Mileage tax for electric vehicles
Electric vehicle drivers will pay 3p per mile from April 2028, with hybrid drivers paying 1.5p.
- Expected revenue: £1.4bn.
Capital gains change for employee ownership trusts
Relief on sales to such trusts will be cut from 100% to 50%, raising £900m.
Other tax increases
Dividend, property and savings income tax rates will rise by 2 percentage points, raising £2.1bn.
CHILDCARE
Two-child benefit cap scrapped
From April 2026, the cap limiting support for third and subsequent children will be removed.
- Estimated to lift 450,000 children out of poverty.
- Cost: £2.3bn.
PENSIONS
Salary-sacrifice pension reform
From 2029, National Insurance will be applied to salary-sacrificed contributions above £2,000 per year.
State pension rises
The basic state pension increases by £440, while the new state pension rises by £575.
SAVINGS
Cash ISA allowance cut to £12,000
The annual tax-free allowance will fall from £20,000 to £12,000 to encourage investment in stocks and shares ISAs.
- Savers aged 65+ may retain the full £20,000 allowance.
FUEL DUTY
Fuel duty frozen
Petrol and diesel duty will remain at 52.95p per litre until September.
- Cost to Treasury: £2.4bn next year.
HOUSING
New mansion tax for homes worth over £2m
Properties valued between £2m–£2.5m will pay £2,500.
Homes worth £5m will pay £7,500.
ENERGY BILLS
Average bills cut by £150
Savings will be achieved through the removal of energy levies, including the Energy Company Obligation scheme.
BENEFITS
Luxury cars removed from Motability scheme
High-end vehicles will no longer be eligible under PIP-related Motability support.
SCHOOLS / EDUCATION
- Student loan repayment threshold frozen for three years.
- Under-25 apprenticeships free in small businesses.
- £820m for the new Youth Guarantee, linking young people to college, apprenticeships or work.
- £5m set aside for secondary school library books.
INHERITANCE
Expanded inheritance tax relief
Full relief allowances may now be transferred between spouses.
TRANSPORT
VAT imposed on Uber and Bolt fares
Ride-hailing firms will pay the full 20% VAT rate, raising £700m annually.
Rail fares frozen
For the first time in 30 years, major rail fares will not rise.
BUSINESS
Business rate relief for retail, hospitality and leisure
Over 750,000 properties will benefit, funded by higher taxes on premises valued above £500,000.
Stamp duty holiday for new LSE listings
A three-year incentive aims to boost London’s competitiveness.
ECONOMY
OBR forecast downgrade
- 2026 GDP cut from 1.9% to 1.4%.
- Inflation expected at 3.5% this year, 2.5% next year.
- Fiscal headroom doubles to £22bn by 2029–30.
NHS / HEALTH
£300m for NHS technology and 250 new community health centres
Over 100 hubs will be opened by 2030, including in Birmingham, Truro and Southall.
Prescription charges frozen at £9.90.
DEFENCE
Spending set at 2.6% of GDP
A significant uplift to support national security commitments.
OTHER
- National Living Wage rises to £12.71.
- Northern Ireland receives £317m, Wales £505m, Scotland £820m.
- £13bn in flexible funding allocated to regional mayors.
Sources: (SKYMoney.com, BBC.co.uk)
