Labour came into power in 2024 promising no tax increases for “working people”, specifically on income tax, National Insurance and VAT.
But as Chancellor Rachel Reeves has found, it’s not easy to stick to this and not just grow the economy but react to everything else that’s happened to push up national debt costs.
In the run-up to this Budget, we’ve seen a huge number of policy ideas floated in the press, including changes to big tax earners such as Income Tax, pensions and ISAs, along with many smaller ones like hotels and electric vehicles.
Well, now we know which ones are actually going to happen. Here are the main announcements from the Budget on 26 November that will impact your finances.
Additional reporting by James Andrews and Zoe Roddy
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Savings & investments
Cash ISA allowance to reduce
The first rumours earlier this year were that Cash ISAs could be scrapped, then that the allowance would be cut to £4,000. In the end, Reeves decided to change the annual limit to £12,000 a year.
This will start in April 2027, though over 65s will keep the existing system. We don’t know if that means people currently 65, or if you get the increased allowance once you hit that age.
Building societies have warned that less money in Cash ISAs could mean mortgage rates increase as they’ll have less money held with them that can be used to lend to homebuyers.
The overall £20,000 allowance across all ISAs remains, with the idea that £8,000 of the total can only be used for investing. This, the government hopes, will increase investments, though there’s nothing about any requirement for this to be in UK assets.
The overall £20,000 allowance will stay at £20,000 until April 2031, as will the Lifetime ISA allowance of £4,000 and the Junior ISA allowance of £9,000.
Extra 2p tax on savings and investments
From 6 April 2026, savings will be taxed at a higher rate than income tax. This new 22% rate will mean an extra 2p is paid for every £1 of interest earned for those on the basic rate
This is only on savings above the Personal Savings Allowance, which will remain in place.
The same 2p increase will apply to dividend income, with a new 10.75% rate for basic rate tax payers and 35.75% for higher rate. The additional rate stays at 39.35%.
Lifetime ISA to be replaced
In early 2026, consultation will begin on a replacement for the Lifetime ISA. This will be a simpler product for first-time buyers.
Help to Save extended
The Help to Save scheme is a big winner for those on low incomes, offering a 50% boost to savings. It was due to end in 2027, but it’ll be made permanent from 2028.
More people will also be able to access the scheme, increasing the total eligible to 4.5 million.
Earnings
Income tax thresholds frozen
The income tax thresholds are staying as they are for another three years, more than the two that had been anticipated. Originally frozen by the Conservative government in 2022 until 2028, Labour initially said last year that this would end that year and increase in line with inflation.
However, they will now remain at the following levels (in England, Wales and Northern Ireland) until 2030/31:
| Tax band | Earnings | Tax rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,270 to £125,140 | 40% |
| Additional rate | Above £125,141 | 45% |
This might not seem too important, but it’s effectively a stealth tax increase. Thanks to something called “fiscal drag”, whenever you get a pay rise, it’ll push you closer to the next tax threshold.
The Office for Budget Responsibility (OBR) says that by 2029/30 there’ll be an extra 780,000 people paying basic rate tax, another 920,000 in the higher tax bracket, and 4,000 more in the additional rate band.
If you move up a bracket, not only will income above this level be taxed at the higher rate, you could also lose or reduce other allowances and benefits, such as the Personal Savings Allowance and Child Benefit.
However, those who get their income only from the State Pension will be able to get exemption from tax if this brings them above the personal allowance level.
Minimum wage to go up
The minimum wage, known as the National Living Wage, will increase from April 2026. For those 21 or over, it’ll move by 50p from £12.21 to £12.71 per hour. That’s around £900 more a year.
Those aged 18 to 20 it’ll be a huge 8.5% increase from £10 to £10.85 an hour. Under 18s will see a 45p hike to £8 an hour.
Overseas workers can’t buy National Insurance credits
Those who live abroad will no longer be able to pay voluntary Class 2 National Insurance contributions from April 2026.
This would mean missing years in their record, which could ultimately impact their access to things like the State Pension later in life. Right now people need to have 35 years of NI contributions to get the full benefit.
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Pensions
New salary sacrifice annual cap
Salary sacrifice allows employees to sacrifice some of their salary into their pension, allowing them to save on income tax and national insurance contributions.
From April 2029, there will be a cap on how much you can save into your pension via salary sacrifice. If you pay in over £2,000 in the year, the amount over will be subject to National Insurance, meaning that it’ll count the same as normal pension contributions.
State Pension to rise by 4.8%
The State Pension triple lock guarantee means that the state pension rises every year in April in line with the highest of earnings growth from May to July, inflation in September, or 2.5%.
Wage growth stood at 4.8%, so the new state pension will rise from £230.25 per week to £241.30 per week. The basic state pension will rise from £176.45 to £184.92 per week from April 2026.
Property
New ‘mansion tax’ via Council Tax system
There’s a new levy coming for high-value homes – thanks to a new high value council tax surcharge.
From April 2028 onwards, owners of properties valued at more than £2 million by the Valuation Office – using 2026 prices – will be hit by a recurring annual charge that’s added on top of existing council tax bills.
There will be four price bands: starting at £2,500 for a property valued between £2 million and £2.5 million rising to £7,500 a year for properties valued at £5 million or more.
These charges will be increased in line with CPI inflation each year.
Landlords to face new property tax
There will be more tax on people making a profit from renting out their properties from April 2027.
Earnings from property will be charged two percentage points more than the standard rate of income tax, the Chancellor said. That comes in at 22%, 42% or 47%, depending on your tax band.
Benefits
Child benefit cap removed
The big news was the ending of the two-child benefit cap, affecting 1.7million children in the UK, from April 2026.
The two-child benefit cap stops lower-income families claiming extra means-tested benefits if they have a third or subsequent child born after April 6, 2017. It affects people claiming Universal Credit as well as Tax Credits currently.
Cost of living
Energy bills to fall by £150
The chancellor announced she would scrap the eco-scheme additions to energy bills. That should save households £150 each year on their bills from April next year onwards.
Sugar tax now on milk products
There’s a new sugar tax coming to milk based drinks. That means, firstly, that milkshakes, lattes, yoghurt and other packaged drinks will no longer be exempt.
Secondly, the overall limit for when the sugar tax begins will fall from 5g of sugar per 100ml to 4.5 grams.
NHS prescriptions freeze
There will be no increase to prescription costs next year, the Chancellor said.
Booze and fags duty to increase
Alcohol duty rates will increase in line with RPI in February. Tobacco duties will rise by RPI + 2 percentage points, this will come into effect by 6pm on November 26, 2025.
Transport
Train fares frozen
There won’t be any increase next year for regulated rail fares, the first time in 30 years that this hasn’t happened. It was expected that they’d go up by 4.8%, the July RPI inflation rate.
However, some fares will still go up, as only season tickets, peak and off-peak fares are covered. Advance and other fares can change at the discretion of the rail companies.
Electric vehicles to face per mile tax
A new 3p per mile tax will apply to electric vehicles from April 2028, reduced to 1.5p per mile for hybrid cars. Then the rate will increase each year by inflation.
This is less than petrol or diesel car drivers will pay in tax via petrol duty, but will be an extra cost for those who’ve moved to electric cars.
Petrol duty to gradually increase
Petrol and diesel duty hasn’t increased since 2011, with each government choosing to freeze the rate at every Budget. It was even cut by 5p in 2022.
Well, that’s going to change from next year. Starting in April 2027, prices at the pumps will increase based on inflation. However, the 5p cut will only be extended to September next year.
Forecourts will also be legally required to report prices in real time, so drivers can easily shop around for the lowest prices.
Bus fare cap to continue
The £3 limit to bus fares will continue until March 2027.
Motability scheme blocks luxury cars
The Motability Scheme is designed to help disabled people lease cars that meet their accessibility needs. Under a revamp, premium vehicles brands such as BMW, Audi, Lexus and Mercedes will be excluded with immediate effect.
There’s also a target for half of vehicles leased via the scheme to be British built by 2035.
Other tax
Tourist tax to be introduced for overnight stays
Mayors in England will have the powers to introduce a visitor levy, also known as tourist tax, on overnight accommodation.
The tax would apply to a visitor’s overnight stay, and mayors and local leaders will be able to determine the charge. There’s no news on what this will look like just yet, but we already see a tourist tax when visiting New York, Paris and Milan, while Scotland is introducing a 5% a night tax in Edinburgh from July 2026 and Wales are going to introduce one too.
Gambling tax to increase
General betting duty, which is the tax paid by companies that offer betting or gambling, will remain at 15% for betting shops, but will rise from 15% to 25% for online betting from April 2027. In addition, remote gaming duty will rise from 21% to 40% in April 2026.
Bingo duty will be abolished from April 2026.
There will be no changes to tax on racing or machine betting duty.
Customs duty for all online purchases
Customs duty is a tax paid on items brought into the UK from abroad. It’s typically paid by the one receiving the goods.
Previously, items bought online and entering the country under the value of £135 would not face customs duty, however, from April 2029, this will be subject to the tax. This will impact purchases from companies like Shein and Temu.
Other announcements
As a personal finance site, we’re focused on announcements that relate to your everyday earnings, spending and saving, rather than the bigger economic and business policies and changes.
However, here are a couple of other things from today that are worth mentioning.
- Higher rates for properties worth more than £500,000 such as warehouses used by the likes of Amazon
- Payments made to those infected or affected by the Infected Blood Scandal who died before receiving their compensation will not be subject to inheritance tax. First recipients would have two years to gift some or all of the payment without having to pay inheritance tax.