Budget 2025: What It Means for Your Money

06/12/2025

Matt Greer

The Chancellor has delivered the latest Budget and, as always, there is a lot of noise to cut through. At Navigate, our job is to break everything down into clear, practical points so you understand what actually affects your financial planning, your family, and your long-term goals.

Here are the key announcements and what they mean for you.

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Minimum Wage Increase

Minimum wage is increasing from April 2026, with all age bands seeing a rise:

• Over-21s: increasing by 50p to £12.71 per hour

• Ages 18–20: increasing by 85p to £10.85 per hour

• Under-18s and apprentices: increasing by 45p to £8.00 per hour

This will boost earnings for younger and lower-paid workers, but it also means business owners will see higher payroll costs. If you run a company or employ staff, it may be worth reviewing cashflow and budgets ahead of April.

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Income Tax Thresholds Frozen Until 2031

The freeze on personal allowance and higher-rate thresholds has been extended by another year to April 2031.

This means as wages rise, more people are pulled into higher tax bands even if their real income is not increasing. It is one of the biggest hidden tax rises in the Budget and will affect almost everyone earning over £50,000.

If you are unsure what this means for your income, we can model this for you as part of your annual review.

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New Mileage Tax for Electric Vehicles

From April 2028, the Government is introducing a mileage charge for EVs:

• 3p per mile for fully electric cars

• 1.5p per mile for plug-in hybrids

• Both rising each year with inflation

If you drive an electric car for work or run a fleet, this will become a key cost to factor in.

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Two-Child Universal Credit Cap Removed

From April 2026, the two-child limit within Universal Credit will be scrapped.
This will provide extra support for affected families and represents one of the more significant welfare changes in the Budget.

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Salary Sacrifice Cap for Pensions (Affects Higher Earners)

A major change for anyone using salary sacrifice or bonus sacrifice to fund pensions.

From April 2029, only the first £2,000 of salary sacrifice will be exempt from National Insurance.
Anything above that will be treated as a normal pension contribution, meaning NI will be due.

This is important for:

• Higher earners

• Those contributing large bonuses into pensions

• Company directors using salary exchange

We will cover this in more detail in client meetings, as it may change how you structure pension contributions.

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New Tax for Homes Worth Over £2 Million

A new “high-value property” council tax surcharge has been introduced.

If your property is valued above £2 million, expect higher ongoing tax costs.
If you are unsure whether this may apply to you, we can check valuations during your next planning review.

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Growth Forecast Revised Down

The OBR now expects average real GDP growth of 1.5%, slightly lower than previous forecasts due to weaker productivity.
You may not feel this directly, but it influences future tax decisions, interest rates, and investment markets.

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FSCS Protection Increase

Good news here. The Financial Services Compensation Scheme (FSCS) deposit limit has increased from £85,000 to £120,000 per person.

This provides more protection for cash savings held with UK banks and building societies.

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Changes to ISAs from April 2027

A few updates to how ISAs will work:

• The annual allowance remains at £20,000

• Only £12,000 can be held in cash (unless you are over 65)

• Over-65s retain the full £20,000 cash allowance

This change encourages long-term investing rather than large cash holdings.

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Higher Taxes on Savings, Property Income and Dividends

Income from savings and rental property will see a 2% tax rise from April 2026.
Dividend tax rates are also increasing to:

• 10.75% for basic-rate taxpayers

• 35.75% for higher-rate taxpayers

If you own a business or rental property, this may affect your tax planning and cashflow.

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Business Relief & Agricultural Relief Now Transferable on Death

A positive change for estate planning.

Previously, Business Relief (BR) and Agricultural Relief (AR) could be lost when someone died.
Under the new rules, they will be fully transferable, giving more certainty for family businesses and farms passing to the next generation.

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Employee Ownership Trusts – Reduced CGT Relief

CGT relief on EOT disposals is being reduced to 50%.
This will impact business owners considering an EOT sale, so planning early will matter more than ever.

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Lifetime ISA (LISA) to be Scrapped

Budget documents confirm that the Lifetime ISA will be phased out, with a consultation being launched in early 2026.

The government plans to replace it with a new, simpler ISA product to support first-time buyers.

There are no immediate changes for existing LISA holders, but the long-term structure is expected to change.

We will keep clients updated once the consultation launches.

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VCT Income Tax Relief Reduced

Upfront income tax relief on Venture Capital Trusts (VCTs) will drop from 30% to 20% from 2026.

This could impact higher-risk tax planning strategies and may increase demand for VCTs ahead of the 2025/26 tax year.

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What Does This Mean for You?

As always, the impact depends on your personal circumstances.
Some of these measures may increase your tax bill. Others create opportunities for planning.

If you are a Navigate client, we will cover all relevant changes at your next review.
If you would like a personalised breakdown sooner, please get in touch anytime.

This Budget brings complexity, but that is exactly what we are here for — helping you stay one step ahead so you can make confident decisions about your future.