The Chancellor has now delivered the 2025 Autumn Budget, announcing major updates to ISAs, pensions, and tax. We cut through the noise to break down the key changes, and what they could mean for your money.
Cash ISA allowance cut to £12,000 from April 2027
The government has confirmed that the overall £20,000 tax-free ISA allowance will remain. However, from 6th April 2027, £8,000 of this will only be available for investment purposes. For those aged 65 or over, the full £20,000 Cash ISA allowance will continue to apply.
The good news is that you can still contribute up to £20,000 into a Cash ISA this tax year (2025/26) and next (2026/27), to make the most of the higher allowance and tax-free interest before the allowance changes. Keeping a regular saving habit remains one of the most effective ways to build financial resilience.
ISA and tax rules apply.
It could be worth opening a Cash ISA and taking advantage of the full £20,000 tax-free limit while you can.
ISA and tax rules apply.
We’ve consistently highlighted to the government that it is vital that they recognise that cash savings remain the bedrock of financial confidence and a cornerstone of financial resilience. A strong cash buffer is what ultimately gives people the confidence to invest over time. At Moneybox, we see more than a million people — many on modest incomes — relying on tax-wrapped accounts to build security and plan for the future.
Another Lifetime ISA consultation announced
We’re disappointed to see no positive changes for first-time buyers in the Budget, and a further Lifetime ISA consultation announced to take place in 2026. As the UK’s biggest provider of LISAs, we’ve long campaigned on the benefits of this product, and the potential impact of future-proofing it for the next generation of young savers.
No changes to the LISA have yet been confirmed, and we’ll keep you updated as more details emerge.
Freeze on tax thresholds extended until 2031
The government has extended the freeze on income tax and National Insurance thresholds until 2031. This means that as wages rise with inflation, more people will gradually be pushed into higher tax bands – a process known as “fiscal drag.” Over time, this can reduce take-home pay, even if your salary isn’t changing in real terms. We’ll continue to break down how these changes may affect your finances, and how to make the most of your savings and investments.
Changes to tax on savings, dividends and property income
From 6th April 2027, there will be a two percentage point increase to the basic, higher and additional rates of savings income tax, increasing them to 22%, 42% and 47% respectively.
While it’s not a significant change, it could slightly reduce the returns you earn on cash savings outside of tax-wrapped products. It’s a good moment to check your savings and investments, and make sure your money is working as effectively as possible.
Tax-free accounts like ISAs are still a great way to protect your returns. Even small tax changes can add up over time, so staying on top of allowances and planning ahead helps you keep your money working hard.
There will also be increases in the rates of tax on dividends and property income.
National Insurance cap on pension contributions
The government has announced a major shift in how pension contributions via salary sacrifice will be taxed. From 6th April 2029, salary-sacrificed pension contributions above £2,000 per tax year will no longer be exempt from National Insurance (NI), meaning both employees and employers will pay NI on any contributions over this threshold.
The Chancellor’s decision to cut pension salary sacrifice will directly hit the wallets of working people and potentially undermine the incentive to save more for retirement at a time when we face a crisis in pension adequacy.
We feel the announcement is a clear example of short-termism. By making pension saving less attractive, future generations will not only bear the cost of supporting the over 14 million people already undersaving, but also the many others negatively affected by this cut to salary sacrifice. We feel it is crucial that the government reconsiders this policy and delivers a pension system that truly meets the needs of the nation.
Council tax increases from 2028 for properties worth more than £2m
From 2028, homes worth more than £2 million will see higher council tax rates. If you own a high-value property, this will increase your annual costs and is something to factor into your long-term financial plans.
For most people, this won’t have an immediate impact, but it’s a reminder of the importance of planning ahead. For homeowners and future buyers, it’s worth thinking carefully about property costs and how they fit into your wider savings and investment goals – making sure you can continue to build financial resilience while managing day-to-day costs.
Two-child benefit cap lifted
In a major move for families, the government has confirmed that the two-child benefit cap will be lifted. This means eligible families will now receive Child Benefit and the Child Element of Universal Credit for all children, not just the first two. It’s a significant change designed to offer greater financial support to households navigating rising living costs, and will provide meaningful help to parents across the UK from the moment it takes effect.
Withdrawal restrictions vary across both Cash ISA accounts. A lower rate of 0.75% AER (variable) applies if your balance is below £500.
Interest is earned daily on cleared balances (rounded down to the nearest penny) and is paid monthly on the first day of each month. The underlying rate is variable, and we’ll inform you if it changes. The bonus interest rate is fixed for 12 months from the date you open your Moneybox Cash ISA.
Tax treatment depends on individual circumstances and may be subject to change in the future.
When investing, your capital is at risk. All investing should be long term. The value of your investments can go up and down, and you may get back less than you invest.
A 25% government penalty applies if you withdraw money from a Lifetime ISA for any reason other than buying your first home (up to £450,000) or for retirement, and you may get back less than you paid into your Lifetime ISA.
The value of your pension can go up and down, and you may get back less than you invest.
We don’t offer financial advice, seek independent advice if needed.