Budget 2025 arrives at a pivotal moment, with the government attempting to balance economic pressures, public expectations, and long-term fiscal sustainability. The result is a budget that leans heavily on tax reform and structural adjustments — one that will be felt by households, investors and businesses in very real ways over the next decade.

On the personal finance front, income tax and National Insurance thresholds will remain frozen until 2030–31, continuing the effect of fiscal drag and gradually moving more people into higher tax bands. Pension planning is also changing: from April 2029, only the first £2,000 of salary sacrificed annually will be exempt from NI, making high levels of salary sacrifice less tax-efficient.

Savers face further adjustments. The Cash ISA allowance will fall from £20,000 to £12,000 from April 2027 for those under 65. In addition, tax rates on dividends, savings income and property income will rise by two percentage points, affecting landlords and investors alike. High-value property owners will also see the introduction of a new mansion tax on homes worth over £2 million, with steeper bands for more expensive properties.

In employment and business, the National Living Wage will continue its above-inflation trajectory, benefiting lower-paid workers while increasing pressure on payroll costs. SMEs may find some relief through government-funded apprenticeships for under-25s, aimed at supporting recruitment and skills development. However, new costs loom for specific sectors, including a new Vehicle Excise Duty for electric vehicles and a significant rise in remote gambling duty.

The welfare system sees a major shift with the removal of the two-child benefit cap from April 2026, a policy expected to have broad social implications.

Ultimately, Budget 2025 reflects a government preparing for slower growth, higher costs and rising demand for public services. With £26–£30 billion in additional tax revenue required to support its plans, the overall tax burden is set to reach historic highs by the end of the decade — signalling a challenging but defining period for the UK’s economic landscape.