Autumn Budget at a glance – how it affects you and your money

The Autumn Budget 2025 delivered several headline changes that will directly affect how people in the UK save, invest and plan for retirement. Whether you’re building up your ISA investments, contributing to a pension, or preparing for life after work, today’s announcements will influence how far your money goes in the years ahead.

Our comprehensive Budget Guide will be out later this week but ahead of that, here’s an easy-to-follow summary of what some of the key new measures mean — and the steps you may want to consider next.

1. Cash ISA allowance cut – what savers need to know

One of the standout changes in the Autumn Budget is the decision to reduce the annual cash ISA allowance.

Key points

• From April 2027, the cash ISA allowance falls from £20,000 to £12,000 for most savers.
• The overall ISA allowance remains at £20,000, meaning you can still invest up to £20,000 a year — but only £12,000 of that can sit in a cash ISA.
• Savers aged 65 and over are exempt: they keep the full £20,000 cash ISA limit.

What this means for savers

If you rely on cash ISAs for safe, tax-free saving, this cut reduces flexibility. Many will now need to consider whether a Stocks & Shares ISA offers better long-term growth potential, especially with inflation still eroding the spending power of cash held over long periods.

This is likely part of a broader policy shift to encourage more households into long-term investment — a theme that runs through the Budget.

2. Salary sacrifice pension contributions capped – a major change for higher earners

Salary sacrifice has long been one of the most tax-efficient ways to boost pension savings. Today’s Budget significantly reduces its appeal.

Key points

• From April 2029, only the first £2,000 of salary sacrifice pension contributions each year will be free of National Insurance.
• Any contributions above that threshold will attract NI charges.
• Higher earners and those making substantial pension contributions through salary sacrifice will feel the biggest impact.

What this means for retirement planning

For years, many employees — especially those in corporate or public-sector schemes — have used salary sacrifice to build their pension pot efficiently. This cap means pension savers must now rethink contribution strategies, assess take-home pay changes, and consider whether other investment routes (such as ISAs or taxable investment accounts) play a bigger role in long-term planning.

It’s a change that could materially reduce pension growth for some, making early review essential.

3. Higher taxes on savings income and dividends

Investors who rely on interest or dividend payments face a squeeze.

Key points

• Tax on savings income and dividend income will increase by two percentage points from April 2027.
• This affects anyone receiving taxable interest or dividend payments outside an ISA or pension.

What this means for investors

Income investors — including those drawing dividends from UK shares, or interest from savings or bond funds — may see lower net returns.

It reinforces the value of:

• Tax wrappers like ISAs and pensions
• Greater use of growth-focused rather than income-focused investment strategies
• Reviewing the balance between taxable and tax-efficient accounts

For retirees who rely on dividend income as part of their spending plan, this is a key change to revisit.

4. A boost for pensioners – State Pension and Pension Credit rising

Some clearer positives in today’s Budget come for those already retired or nearing retirement.

Key points

• The State Pension will rise by 4.8% from April 2026, delivering up to £575 extra per year.
• Pension Credit will also increase by 4.8%, helping lower-income pensioners.

What this means for retirees

While the rise helps offset cost-of-living increases, it’s worth considering how additional income interacts with tax thresholds — which may remain frozen in coming years. Some pensioners could find themselves pushed into higher tax bands.

This makes retirement income planning even more important, especially for those drawing from multiple sources such as pensions, ISAs and investment portfolios.

Final thoughts – and why advice matters more than ever

This year’s Autumn Budget brings meaningful changes for anyone saving, investing or preparing for retirement. With the cash ISA limit reducing, salary sacrifice becoming less tax-efficient, and income taxes rising on dividends and savings, many traditional approaches to building wealth may need an update.

The good news is that with the right guidance, you can adapt your financial plan and stay on track. The earlier you review your options, the more choice you have.

If you’re unsure how these changes affect your savings, investments or retirement plans, why not give us a call? We can help you understand the impact, explore the most tax-efficient options, and build a plan that makes the most of your money in light of the Autumn Budget changes.

Please note

All information is from the Budget documents found on this page.

The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice. 

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.  

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