After an early leak of the Office for Budget Responsibility’s analysis, Chancellor Rachel Reeves has now announced a host of changes as part of the Autumn Budget, that aims to reshape pensions, minimum wage and two child benefits. The £26bn package combines a mix of revenue raising measures, support for households and incentives for businesses. Alongside this, Reeves has pledged significant investment in public services and infrastructure. With so many policies announced, let’s take a closer look at what was announced.
Wages and employment
Earlier this week, it was announced that the minimum wage increase to £12.77 for workers over 21 and £10.85 for workers aged 18 to 20.
Student loan repayment threshold frozen – The repayment threshold will remain unchanged for three years.
New support for young people and apprentices – A new Youth Guarantee, backed by £820m, will ensure young people can access college places, apprenticeships or personalised employment support. After 18 months on benefits, 18–21-year-olds will be offered paid work instead. Training for apprentices under 25 at small businesses will now be free.
Tax thresholds frozen for three more years – The government has announced that they will keep income tax thresholds locked in place until 2029. Dragging more people into the higher tax bands as wages rise in a measure forecast to add £8bn to Treasury coffers.
Two-child benefit cap to be scrapped – From April 2026, parents will once again be able to claim support for more than two children through means-tested benefits. The government believes this move could lift 450,000 children out of poverty, although it comes with a £2.3bn annual price tag.
Energy bills cut by £150 – From April, the average household energy bill will fall by £150, funded partly by scrapping the ECO scheme.
Pension and wealth changes
Pension salary-sacrifice changes coming in 2029 – From April 2029, National Insurance will apply to salary-sacrificed pension contributions above £2,000 per year, a policy expected to raise £4.7bn.
State pension boost
Pensioners will benefit from:
- £440 annual increase to the basic state pension
- £575 annual increase to the new state pension
Cash ISA allowance cut to £12,000 – From April 2027, savers can put £12,000 a year into cash ISAs tax-free, down from £20,000. This aims to encourage more investment into stocks and shares ISAs instead. Those aged over 65 can keep the full £20,000 allowance.
Mansion tax introduced – Owners of properties worth more than £2m will now face an annual levy:
- £2,500 for homes valued between £2m and £2.5m
- Up to £7,500 for homes worth £5m
This new tax is expected to raise £400m.
Transport changes
Fuel duty frozen – The duty on petrol and diesel stays at 52.95p per litre until next September. The freeze will cost £2.4bn next year and around £900m annually thereafter.
Luxury cars removed from motability scheme – Premium vehicles will no longer qualify for subsidised leasing under the Motability programme.
Ride-hailing journeys face new tax – Trips booked through Uber, Bolt and similar apps will be taxed under a measure already dubbed the “taxi tax.”
Rail fares frozen – For the first time in 30 years, rail fares, including season tickets and peak/off-peak returns, will not rise.
Mileage tax introduced for electric and hybrid vehicles – Electric vehicle drivers will face a 3p-per-mile charge, while hybrid drivers will pay 1.5p per mile. According to the OBR, this change will bring in £1.4bn.
Business taxes
Dividend, property and savings income taxes increased
Taxes on dividends and various forms of investment income will rise by 2 percentage points, contributing £2.1bn in additional revenue.
Business rates reforms
Business rates will be cut for 750,000 retail, hospitality and leisure properties, funded by tax increases on sites valued over £500,000, particularly large warehouses used by online retailers.
Stamp Duty holiday for new London listings
Companies joining the London Stock Exchange will enjoy a three-year stamp duty exemption.
Changes to employee ownership trusts
Capital gains tax relief on business sales to Employee Ownership Trusts will be cut from 100% to 50%, raising an estimated £900m.
Gambling industry hit with major tax hikes
In a significant overhaul of betting taxes:
- Remote gaming duty jumps from 21% to 40%
- Online betting tax rises from 15% to 25%
- Bingo duty will be abolished from 1 April 2026.
Altogether, these reforms are expected to raise over £1bn.
Other points
Investment in NHS technology and community health centres
The government will invest:
- £300m in NHS tech
- Funding for 250 new neighbourhood health centres, with over 100 expected by 2030
Defence and devolved administration funding
- Defence spending set at 2.6% of GDP
- Additional funding: £317m (Northern Ireland), £505m (Wales) and £820m (Scotland)
- £13bn in flexible funding for seven regional mayors to support skills, business growth and infrastructure
OBR Forecast
The OBR now expects:
- Slower growth: 1.4% in 2026, down from 1.9% predicted in March
- GDP growth of around 1.5% for the remainder of the decade
- Higher inflation: 3.5% this year and 2.5% next year
- £22bn of fiscal headroom by 2029–30
Rachel Reeves’ second budget sets a clear direction including a mix of targeted taxation, incentives for investment, and social reforms designed to support households, businesses, and future growth. While the freezes and new levies will raise substantial revenue, the government is also signalling strategic investment in health, skills, and infrastructure.
For individuals and businesses alike, understanding the implications, whether it’s higher taxes on gambling, changes to pension contributions, or the new mileage charge for electric vehicles, will be key to plan for the years ahead.
