What does the Autumn Budget 2025 mean for you?

On Wednesday, 26th November, Chancellor Rachel Reeves announced the Autumn Budget 2025 – a range of measures that will impact many people financially in various aspects of their lives.  

In this blog, we will highlight what changes are being planned and how they may impact your personal and household finances. For more details about the various changes, visit the government’s website. 

Personal Tax 

• Income tax and National Insurance thresholds will be frozen for three years. 
• This is considered a “stealth tax” as it is less noticeable than an increase to income tax. It means working people will end up paying more tax as they are moved into higher tax bands. This is because tax thresholds don’t keep up with inflation. 

National Living Wage and National Minimum Wage increases 

The following changes to the National Minimum Wage and National Living Wage are taking place from 1st April 2026: 

• The National Living Wage will increase by 4.1% to £12.71 per hour. 
• The National Minimum Wage for 18–20-year-olds will increase by 8.5% to £10.85 per hour 
• For 16–17-year-olds and apprentices, the National Minimum Wage will increase by 6.0% to £8.00 per hour. 
• The accommodation offset will increase by 4.1% to £11.10 per day. 

Two-child benefit cap scrapped 

• The two-child benefit cap has been scrapped. This change will come into effect in April 2026. 
• The two-child cap meant that parents could only claim Universal Credit for their first two children born before 6 April 2017. 
• This means families with more than two children who were subject to this cap will be better off, with an extra £3,500 per child. 

Motability Scheme 

• The Motability scheme will be reformed, while the number of vehicles available will reduce.
• This will bring the scheme “back to its original purpose,” the chancellor says, of offering “cost-effective leases to disabled people.” 

Winter Fuel Payments 

• Winter Fuel payments will continue to be paid with a £35,000 income threshold. 

Housing Benefit 

• To improve work incentives, the government is adjusting how earnings are treated for Housing Benefit and Universal Credit claimants in supported housing and temporary accommodation. 
• This means most claimants will not be subject to reductions in income for working more hours. 

Energy Bill Reduction 

• The energy company obligation (ECO) scheme – a home insulation scheme – introduced by the Conservatives will be scrapped. 
• While the ECO scheme helped low-income households insulate their homes, scrapping this will mean a saving of approximately £150 per year on average from April 2026. 

State Pension Changes 

• There will be an above-inflation rise to both the New State Pension and Old State Pension. 
• The full New State Pension will rise from £230.25 to £241.30. You’ll be on this if you reached State Pension age after April 2016. 
• The full Old State Pension will rise from £176.45 to £184.90. You’ll be on this if you reached State Pension age before April 2016. 

Prescription costs frozen in England 

• The cost of a single prescription in England will remain at £9.90 for 2026/27. 
• The three-month and 12-month prescription prepayment certificates (PPC) will also remain frozen at £32.05 and £114.50 respectively. 
• Hormone Replacement Therapy PPC will remain at £19.80. 
• This only applies to England; prescriptions in Scotland, Wales, and Northern Ireland will remain free. 

Our response to the Autumn Budget 2025

More information is available here: 

Money Helper: https://www.moneyhelper.org.uk/en/blog/everyday-money/what-the-autumn-budget-means-for-you

MoneySavingExpert: https://www.moneysavingexpert.com/news/2025/11/martin-lewis-autumn-budget-2025/