Budget 2025

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Budget 2025 Overview: Middle-Class Tax Rises, Welfare Expands

Rachel Reeves’s 2025 Budget brings significant tax increases for working, saving and investing households — while expanding support for families who are not currently in work.

Key Tax Rises for Middle-Income Clients

  • Income tax & NI thresholds frozen to 2031 → automatic annual tax increases.

  • Dividend taxes up, and the tax-free dividend allowance of £500 remains.

  • Interest income is taxed more heavily as allowances fall in real terms.

  • Cash ISA allowance cut to £12,000 for under-65s.

  • Higher taxes on rental income and property gains.

  • Salary sacrifice NI relief capped at £2,000 from 2029.

  • New road charges for EV and hybrid drivers.

Who Benefits?

  • The most oversized new spending item: the two-child benefit cap has been abolished, primarily helping larger households not in work.

  • Additional cost-of-living support focused on low-income and benefit-reliant families.

Bottom Line

If you work, save, invest or own property, you will pay more.
If you don’t work, you will receive more support.

For PWS clients, thoughtful financial planning is now more essential than ever.

Budget Overview

Budget 2025: What Rising Taxes and Expanded Welfare Mean 

Read More

Detailed Breakdown of Each Key Budget Measure

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