What will be in the Budget 2025 and what will it mean for Devon families?

After weeks of speculation Chancellor Rachel Reeves will present her much-anticipated – and much dreaded – Autumn Budget to the House of Commons tomorrow (Wednesday, November 26). But what will it contain?

There is a much-touted ‘£22billion black hole’ in the public finances, according to the Government, with many bracing for tax hikes that could hit a range of people from savers and workers to inheritance and property sales.

In advance of the Budget the Chancellor has also dangled a number of carrots promoted as helping working people, families and pensioners tackle the cost of living crisis.

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So what are the main talking points and what do we know about the Autumn Budget so far? Let’s look at the ‘sticks’ before the ‘carrots’…

Income tax – it was widely trailed a few weeks ago that Rachel Reeves was considering putting the rate of income tax up, despite Labour manifesto promises this wouldn’t happen.

Following considerable negative reaction, this appears to have been dropped, however many analysts are predicting a freeze on the personal tax allowance of £12,570, meaning with an increase in wages or the State Pension, more people will be dragged into the tax bracket and/or paying more tax on their earnings.

Cash ISAs – for months there has been speculation the Chancellor would reduce the amount savers can deposit in a cash ISA tax free, to encourage more people to invest in the UK stock market via ‘stocks and shares’ ISAs, pensions or other investment vehicles.

This issue has been on again and off again for a long time, but this week sources told the Financial Times Ms Reeves will cut the current £20,000 tax free limit to £12,000.

‘Wealth taxes’ – other measures to reduce the deficit appear to include a so-called ‘mansion tax’, a levy on properties valued above £2m, as well as a profits tax on gambling companies and a levy on bank profits.

‘Landlord tax’ – it is also being reported the Chancellor is considering applying National Insurance (NI) contributions to rental income – a move that could raise around £2bn.

EV tax – it has been trailed this week that Ms Reeves could impose a possible pay-per-mile tax on electric vehicles.

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Salary sacrifice schemes - the Chancellor is said to be introducing limits on how much employees put in salary sacrifice schemes before it becomes subject to national insurance. Reports suggest she could cap this at £2,000 a year, which would reduce how much people pay into their pensions.

Those are a few of the ‘sticks’ the Chancellor is reported to be thinking about wielding to raise revenue, but what carrots are on offer for working people, families and pensioners?

Prescription charges – HM Treasury has announced the Chancellor will freeze prescription charges at their current rate of £9.90 per item. The Treasury says this will save patients £12m a year.

Rail fares – on Monday it was announced that some rail fares would be frozen for the first time in 30 years, branded a ‘historic intervention’ by the Treasury and said to save commuters on some rail routes more than £300 per year.  

Student loans for care leavers - all care leavers will be guaranteed full student loan support, which will entitle them to the maximum maintenance loan of £13,500. Until now, this has been a barrier to many care leavers and only those on low incomes could qualify.

State Pension - the Chancellor is expected to announce that 13 million pensioners will benefit from an above inflation rise to the State Pension next April.

Those on the full rate of the new State Pension are set to receive more than £550 a year more.

It should be noted this would have happened regardless as the Government remains committed at this time to the ‘triple lock’ on the State Pension, which guarantees an increase based on the highest of three measures: inflation, average earnings growth or a minimum of 2.5%.

However, with the current State Pension at £11,973 a year, adding £550 to that will take pensioners over the income tax threshold if they have any additional source of income from other pensions, investments or employment, meaning some might be paying income tax for the first time in their retirement.

Benefit fraud and errors – Rachel Reeves intends to announce an additional £1.2billion of savings to be made as efforts continue to identify incorrect Universal Credit payments to 2031.

Some 13% paid out was incorrect apparently, due to fraud or error, during the last Parliament, the Treasury has claimed. It said a 6,000-strong team at the Department for Work and Pensions has already reviewed more than one million cases and saved the taxpayer £1bn.

Philip Milton, managing director of independent North Devon wealth management and financial advisory firm Philip J Milton & Company Plc, said he would be reserving judgement on the Budget until all the facts were known.

But Mr Milton added: “From what we are hearing so far, there appears to be a few smaller ‘carrots’ dangled but some rather nasty ‘big sticks’ lurking in the Chancellor’s Budget too.

“Speculation has been rife in our industry for weeks if not months and we have refused to be drawn-in by some of the more ridiculous rumours. Our advice to our clients or indeed anyone has been and continues to be, do not take knee-jerk decisions on important financial and indeed life-changing matters until you know all the facts.

“By tomorrow afternoon we shall all know the outcome of the Budget and the small print and can begin planning for any changes and guiding our clients as needed.”

Chancellor Rachel Reeves will deliver her Autumn Budget to the House of Commons tomorrow (Wednesday, November 26) at around 12.30pm.