The November 2025 Budget: Now the Dust Has Settled – What It Means for You

The November 2025 Budget: Now the Dust Has Settled-What It Means for You

The Chancellor’s Budget on 26 November 2025 delivered a broad package of tax-raising measures. These November 2025 Budget tax changes are expected to impact various sectors significantly.

These changes in the November 2025 Budget are expected to have significant impacts on various sectors.

With income tax, VAT and National Insurance ruled out, and economic growth downgraded by the Office for Budget Responsibility, the government had limited room to manoeuvre.

The tax changes focusing on different areas in November 2025 aim to boost revenue while managing complexity.

The result was a Budget that focused on fiscal drag, savings reform and future pension changes rather than immediate headline tax rises.

Below is a practical summary of the most important announcements and what they mean in real terms.

These tax changes announced in the November 2025 Budget will significantly affect ISAs and savings.

ISAs and Savings

As widely expected, changes were announced to the ISA regime as part of the new tax policies in November 2025.

From April 2027, the Cash ISA allowance will be capped at £12,000 for those under age 65, with the remaining £8,000 of the £20,000 allowance required to be invested via a Stocks and Shares ISA.

To prevent circumvention, the government will introduce rules to restrict “cash-like” investments within Stocks and Shares ISAs. These include:

• No transfers from Stocks and Shares ISAs back into Cash ISAs
• New tests to determine whether investments are effectively cash
• Tax charges on interest held inappropriately within investment ISAs

The overall ISA allowance will remain frozen at £20,000 until April 2031. A consultation in 2026 will also explore replacing the Lifetime ISA with a simpler first-time buyer ISA, removing the current 25% withdrawal penalty.

Outside of ISAs, the Help to Save scheme will become permanent from 2028 and be expanded to cover more individuals.

Read why now is a good time to invest in ISA’s

Comment: While intended to raise revenue, these measures add complexity rather than simplicity.

Many existing portfolios may need reviewing ahead of 2027, particularly where cash or money market holdings are used within investment strategies.

Pensions

There was little immediate change to pension taxation, which will come as a relief to many.

The State Pension will rise by 4.8% from April 2026, in line with earnings, and Pension Credit will also increase.

From April 2029, contributions above £2,000 per year made via salary sacrifice will attract National Insurance for both employers and employees.

While delayed, this will add administrative complexity in future due to the November 2025 Budget tax changes.

The government also confirmed:

• Well-funded defined benefit schemes may pay surplus funds to members from April 2027
• Unused pension funds will fall into inheritance tax from April 2027
• Executors may instruct schemes to withhold 50% of benefits to cover potential IHT liabilities

Comment: Despite speculation, there were no changes to annual allowances, tax relief or pension commencement lump sums.

For now, pension planning remains stable, though inheritance tax treatment will require careful future planning, as it is affected by the November 2025 Budget tax changes.

Personal Taxation

Fiscal drag continues to play a central role.

The personal allowance (£12,570) and higher-rate thresholds (£50,270 and £125,140) will remain frozen until April 2031.

From April 2027:

• Savings income tax rates will rise by 2%
• Property income will be taxed separately at higher rates
• Allowances such as the personal allowance will be applied last, not first

Dividend tax rates will rise by 2% from April 2026, increasing pressure on company directors to review remuneration strategies.

Comment: These changes reinforce the importance of tax-efficient wrappers such as ISAs and pensions, particularly as savings, dividends and property income face higher taxation under the November 2025 Budget.

Inheritance Tax

Inheritance tax thresholds remain frozen until 2031.

A new £1 million allowance will apply to business and agricultural property relief, with any excess qualifying only for 50% relief. Unused allowances can be transferred between spouses.

Comment: The freeze, combined with pensions entering IHT from 2027, means estate planning will become increasingly important in light of the November 2025 Budget tax changes.

Other Measures

• VCT income tax relief reduced to 20%, but investment limits doubled
• High-value homes over £2m to face annual council tax surcharges from 2028
• National Living Wage to rise to £12.71 per hour from April 2026

Final Thoughts

The November 2025 Budget was notable less for immediate shocks and more for future complexity, setting a precedent with the fiscal adjustments announced.

Despite intense speculation, ISA and pension allowances remain available for the coming tax year, giving investors time to plan calmly and strategically.

As ever, the key is not reacting to headlines, but ensuring decisions are made in the context of long-term goals, tax efficiency and individual circumstances for these tax changes.

 

This blog provides general information and does not constitute personalised financial advice. Speak to a regulated financial adviser about your specific circumstances