What does the Autumn Budget mean for you ?

The latest Autumn Budget brings a series of changes that will affect many aspects of daily life, from taxes and pensions to wages and travel costs. Understanding these updates can help you plan your finances and make informed decisions about your savings, investments, and spending. This post breaks down the key points of the budget and explains what they mean for you.

Taxes and Contributions

One of the most significant announcements is the freeze on National Insurance Contributions (NICs) and income tax thresholds for another three years, until 2031. This means the income levels at which you start paying these taxes will not increase with inflation, potentially pushing more people into higher tax brackets over time.

The salary sacrifice scheme, which allows employees to exchange part of their salary for tax-free benefits like pension contributions, will have a new cap of £2,000 starting April 2029. This change could reduce the tax advantages for those currently contributing larger amounts through this scheme.

Tax rates on dividends, property income, and savings income will rise by 2 percentage points. For example, if you receive rental income or dividends from shares, expect to pay more tax on these earnings.

Capital Gains and Business Sales

If you are involved in selling a business to an Employee Ownership Trust (EOT), the capital gains tax relief will be cut from 100% to 50%. This reduces the tax benefit for business owners who transfer ownership to employees, potentially affecting succession plans.

On a positive note, a stamp duty holiday will be introduced for three years to encourage new UK stock market listings. This could stimulate investment opportunities and support businesses seeking to raise capital.

Wages and Apprenticeships

The National Living Wage will increase by 4.1% from April 2026, reaching £12.71 per hour. For younger workers aged 18 to 20, the National Minimum Wage will rise by 8.5% to £10.85 per hour. These increases aim to improve earnings for lower-paid workers, though inflation may still impact overall purchasing power.

Small and medium-sized enterprises (SMEs) will benefit from free training for apprentices under 25. This investment in skills development could help young people gain valuable experience and improve their job prospects.

Travel and Transport Costs

Fuel duty, which was cut by 5p per liter, will remain at this reduced rate until 2026. This extension offers some relief for drivers facing high fuel prices.

However, a new vehicle excise duty will be introduced for electric vehicles starting April 2028. Owners of electric cars will pay a mileage charge of 3p per mile, while plug-in hybrids will be charged 1.5p per mile. This change reflects the government’s effort to balance road maintenance funding as electric vehicles become more common.

Sector-Specific Changes

The gambling industry will see significant tax increases. Remote Gaming Duty will rise from 21% to 40% in April 2026, and online betting duty will increase from 15% to 25% in April 2027. Conversely, Bingo Duty will be abolished from April 2026, which may encourage more participation in bingo games.

Manufacturing businesses will benefit from cuts to electricity prices, though details are still forthcoming. This could lower operating costs and support competitiveness in the sector.

The Soft Drinks Industry Levy, known as the sugar tax, will extend to pre-packaged milk-based drinks with added sugar from January 2028. This aims to reduce sugar consumption and promote healthier choices.

Property and Council Tax

A new high-value council tax surcharge, often called the ‘mansion tax,’ will be introduced in April 2028. Properties worth over £2 million will face an annual surcharge of £2,500, while those valued higher will pay £7,500. This additional tax will be charged alongside regular council tax and targets owners of luxury homes.

What This Means for You

The Autumn Budget’s changes will affect different people in various ways depending on income, employment status, and investments. Here are some practical takeaways:

• Review your salary sacrifice arrangements to understand how the £2,000 cap might affect your pension contributions or other benefits.

• Plan for higher taxes on dividends and rental income if you have investments generating these earnings.

• Consider the impact of frozen tax thresholds on your overall tax bill, especially if your income grows over the next few years.

• Prepare for increased costs if you own an electric vehicle, factoring in the new mileage charge starting in 2028.

• If you own a high-value home, budget for the new council tax surcharge that will apply from 2028.

• Take advantage of free apprenticeship training if you run an SME or are a young person seeking to develop skills.

  
  

These updates reflect the government’s priorities in balancing public finances, supporting certain sectors, and encouraging healthier and greener choices. Staying informed and adjusting your financial plans accordingly will help you navigate these changes smoothly.

The Autumn Budget offers both challenges and opportunities. By understanding the details and acting early, you can protect your finances and make the most of new incentives. Keep an eye on further announcements, especially regarding manufacturing electricity costs and other sector-specific support.