Autumn Budget: main points at a glance

The government had a delicate tightrope act to walk in this year's Autumn Budget: delivering new spending commitments while deploying revenue-focused reforms to plug the gap in the public coffers.

There was a huge amount of speculation beforehand about what might be announced - in some cases fuelling panicked behaviour by savers and investors. 

Below we have summed up which policies made it into the Budget, and which were left out. 

What made it in?  

Restricting salary sacrifice

• One of the biggest policy changes for pension savers was the announcement that there will be a cap on how much of your salary you can sacrifice for pension contributions without incurring National Insurance (NI). 
• The change won’t be implemented until April 2029, giving savers time to plan. 
• Salary sacrifice is an agreement between you and your employer where you give up part of your cash pay in exchange for a non-cash benefit - quite often contributions into a workplace pension, but also other benefits such as leasing a car or a Cycle to Work scheme. 
• Because your taxable income is lower, you pay less income tax and NI. Your employer also saves NI, and some employers pass those savings back into your pension.
• The government has announced that, as of 2029, it is capping the maximum amount of your salary you can sacrifice for pension contributions without incurring NI to £2,000 per year.  
• Any pension contributions above that £2,000 cap will, in future, incur both employee and employer National Insurance contributions. 
• NI will apply at the usual rates: 8% on salaries under £50,270 and 2% on income above that. 
• Someone earning £40,000 and paying 5% of their salary into their pension via salary sacrifice would not face any additional NI as a result of the change because the sum sacrificed is below the £2,000 cap.
• However, someone earning £40,000 and paying 10% of their salary into their pension via salary sacrifice would face an additional bill of £160. 
• Similarly, someone earning £110,000 and putting £10,000 of that into their pension via salary sacrifice would also face an additional bill of £160 because of the lower rates of National Insurance if your earnings are above £50,270. 

ISA changes

• The government has also confirmed that the maximum you can contribute into a cash ISA will be cut from £20,000 per year to £12,000. This change will come in from April 2027. 
• Over-65s will retain their full £20,000 cash allowance. 
• The move is part of the government’s ambition to encourage more people to invest their money rather than hoarding cash - hopefully delivering better returns for savers while boosting economic growth. 
• The limit for investments remains intact, so you will still be able to save up to £20,000 per year into a stocks and shares ISA. 

Income tax 

• Labour stuck to its manifesto pledge not to raise the headline rates of income tax, NI, or VAT. 
• However, personal income tax thresholds will be frozen until 2030-31 - a tactic often referred to as a ‘fiscal drag’. As wages rise over time, frozen thresholds mean more people are pulled into higher tax brackets without any formal rate increase. The move is anticipated to raise £8.3bn by the end of the period.
• The thresholds are currently: £12,570 for the income tax personal allowance, £50,270 for higher-rate tax, and £125,140 for additional-rate tax.

• Watch: Why this is the most extreme 'fiscal drag' in UK income tax

Increase in income tax on savings and property 

• The Treasury also announced a two-percentage-point increase in tax on income from savings and property. It effectively introduces new income tax rates of 22%, 42% and 47% depending on the individual's personal tax band - from April 2027. 
• Tax on dividends, commonly from investments outside an ISA, will also see increases - but from April 2026. The ordinary rate will rise from 8.75% to 10.75% and the upper rate will rise from 33.75% to 35.75%. The additional rate will remain unchanged at 39.35%.

Other investment changes

• The income tax relief available on Venture Capital Trusts (VCTs) will be reduced from 30% to 20% from April 2026. It is part of a 're-engineering' of VCTs and Enterprise Investment Schemes (EIS) that channel money into early-stage companies. Allowances will be increased.
• Investors in companies listing in the UK will not be liable for stamp duty for three years. Britain's 0.5% stamp duty on all share purchases makes London an outlier among major global stock markets and there have been calls to abolish it. The Treasury said that it would "continue to evaluate stamp taxes on shares to ensure the UK is positioned well for the future". 

Enhanced council tax on ‘mansions’

• From 2028, the government will introduce a new ‘high-value council tax surcharge’. 
• Properties worth more than £2m will face an annual charge of between £2,500 and £7,500, depending on which of the four valuation bands they fall into. 
• It will be collected along with council tax and the government will consult on options for support or deferral for those who can’t pay. 
• Estimates suggest there are around 150,000 households with homes worth over £2m that will be impacted by the change. 
• According to the Office for Budget Responsibility (OBR), the change will raise £400mn in 2029-2030.

Restricted access to state pensions for those living abroad 

• The Treasury announced that it will limit the ability of those living abroad to build up UK state pensions.
• It is removing access to the cheapest Class 2 voluntary NI contributions for individuals abroad and increasing the initial residency or contributions requirement for voluntary NI contributions to 10 years.

New tax on electric vehicles

• Owners of electric vehicles and plug-in hybrids face a new road charge from April 2028.
• How much you pay will depend on how much you drive. Electric cars will be taxed at 3p per mile - roughly half the rate of fuel duty paid by petrol and diesel drivers. Plug-in hybrids will be taxed at 1.5p per mile.
• The rate will increase in line with inflation from 2029-30. 

What was left out? 

Pensions tax-free cash

• Like last year, in the lead-up to this Autumn Budget, there was fervent debate around whether the government might further restrict the 25% tax-free cash that can be taken from pensions (currently capped at £268,275). This caused many people to panic and take their tax-free lump sums - possibly when they didn’t need the money. 
• As happened last year, the change never materialised. 
• Individuals who took tax-free cash when they didn’t need it could find it has negative consequences for future financial planning. This highlights the dangers of making financial decisions on the back of speculation, without seeking advice or guidance on your options. 

Higher rate tax relief on pensions

• There were also rumours that the Treasury could reduce the amount of tax relief high earners can get on their pension contributions. 
• Currently, those on large salaries benefit from more generous tax relief on their pensions - 40% for higher-rate taxpayers and 45% for additional-rate taxpayers compared with 20% for basic-rate taxpayers. 
• In the end, no changes were made, but it is still something that could be on the cards in future. 

• Read: 8 questions before you take tax-free cash from your pension
• Watch: Taking pension tax-free cash? Don't make these mistakes
• Open a Fidelity Stocks and Shares ISA

National Insurance on landlords

• Pre-Budget there were reports that the government may target landlords by charging NI on rental income. NI is currently paid by employees earning more than £12,570 a year and by self-employed people making a profit of more than £12,570 a year. But earnings from buy-to-let properties are largely exempt from NI contributions.
• Ultimately the government did not opt to levy NI on rental income and instead hiked income tax on property.  

Capital Gains Tax (CGT)

• There were question marks around whether the Government would make further changes to CGT. 
• The Chancellor raised CGT rates at the last Budget — increasing the lower rate from 10% to 18% and the higher rate from 20% to 24%. 
• However, there were no major changes this year to either CGT rates or allowances. 

Inheritance tax (IHT)

• The inheritance tax thresholds remain frozen at their current levels for the tax years up to and including 2030-31 but the government held off from tinkering further. 

• Watch: Inheritance tax: what people get wrong about the 7-year rule

Exit taxes

• It had been suggested the Treasury could introduce a “settling-up charge” or “exit tax” on assets left in the UK that would be paid by people who left the country.
• Currently, anyone emigrating can sell their UK assets, including shareholdings, after leaving without having to pay CGT. The UK is one of only two countries in the G7 not to have such a tax already - the only other being Italy. 
• In the end, no such policy was announced. 

Tax on lawyers and accountants

• Rumours of tax hikes for lawyers, accountants and doctors also failed to materialise. 
• It was speculated the Treasury could increase tax for people working under Limited Liability Partnerships (LLPs). These structures mean they are treated as self-employed for tax purposes and not subject to employers' National Insurance. Again, the rumoured change was not announced.        

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing into a fund, please read the relevant key information document which contains important information about the fund. Eligibility to invest in a SIPP or ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. Withdrawals from a SIPP will not normally be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.