Vernon Sellahewa
Court of Protection
Budget 2025
Today, 26th November 2025, is the day for the long-discussed Budget by the Chancellor Rachel Reeves.
Some of the expectations have changed – income tax was said to be going up, but it is not now – instead there is a continued freeze on the personal allowance that may not increase until 2031, so a fix for almost ten years. Many matters were pre-announced, so there is little surprise.
Here is a summary of the changes mentioned in the Chancellor’s announcement today.
Income Tax & National Insurance Contributions
Freeze on Income Tax thresholds to 2030/2031, to remain at £12,570 for another three years. Inflation increases salaries and therefore the freeze is deemed a “stealth tax”. The last increase in the threshold for basic rate income tax was in 2021/2022 (although that was only £70 increase from the £12,500 for 2020/2021), so it will be unchanged for a decade. National Insurance thresholds will also be maintained.
National Minimum Wage (NMW)
The NMW will be increased by 4.1% in 2026. The rise from £12.21 to £12.71 is added to the recent National Insurance increases for employers. Younger people of 18 to 20 years old have an 8.5% increase to £10.85 to get closer to the figure for over 21s.
State Pension
Triple lock to continue to raise state pensions by 4.8% from April 2026.
ISA Limits
From April 2027 the cash ISA allowance is cut from £20,000 to £12,000 reducing the amount that can be saved tax-free annually in cash savings. This is proposed to encourage stocks and shares ISAs that will be maintained at the higher annual allowance (or by adding £8,000 to £12,000 in cash ISAs).
Pensions Savings
A salary sacrifice cap of £2,000 a year from 2029 will limit the amount payable into pensions free of tax. This reduces the amount people can save into pensions through salary-sacrifice arrangements and may discourage some pensions savings. Any payments above £2,000 will be taxed at the same rate as other employee pension contributions.
Child Benefit Cap
The benefit will be paid for more than two children, which scraps the two-child benefit cap. The cost of this is £3bn.
Property and Savings Tax
Landlords will pay 2% more on rental income. This increase also applies to dividends and savings income. Basic rate taxpayers’ rate will be 22%, higher rate 42% and additional rate 47% for income above the personal savings allowance.
“Mansion Tax”
From 2028 High Value Council Tax Surcharge of £2,500 for properties worth over £2m and £7,500 for £5m properties.
Fuel duty
Extending 5p fuel price cut to Sept 2026.
Tax on motorists
Introduction of Electric vehicles excise duty. Pay per mile charges of 3p per mile for electric and 1.5p per mile for hybrids.
Inheritance Tax
All funds paid for Infected Blood Compensation will be exempt from Inheritance Tax.
Motability
BMW, Mercedes-Benz, Audi, Lexus, and Alfa Romeo cars will no longer be available under the Motability scheme with immediate effect. It also appears that VAT will now be charged for the vehicle acquisition and insurance.
Sugar tax
Extra 20% on prepared/pre-packaged milk drinks (e.g. milkshakes, etc) which are high in sugar.
Gambling Taxes
Increasing online gaming from 21% to 40% and online gambling from 15% to 25%. No increase for in-person gambling, including horse racing.
Samantha Hamilton, head of the Court of Protection department at Mullis & Peake LLP says;
“As a Court of Protection appointed deputy or attorney under a Lasting Power of Attorney I must keep up to date with all financial and taxation matters for my clients. In this budget there are some of the expected increases in taxation, based on months of discussions on the topic, but not all the changes discussed have occurred.
Looking on the bright side, if it is the same as last year the worst decisions will be reversed if enough people challenge the outcome, such as the reinstatement of winter fuel payments and the cancellation of proposed benefits cuts. Keep the above list and see what actually happens in reality.”