After weeks of speculation, the Autumn Budget was unveiled on Wednesday, 26th November. While little was mentioned directly regarding property and government-funded schemes aimed at helping people get onto the property ladder, there were several important financial changes that will impact homeowners and prospective buyers alike.
Affordability Remains the Number One Issue
With many referring to this budget as a 'welfare' one, it’s clear that moderate earners—those working hard to save for a first home or those who have just managed to buy a new home—may face increasing affordability pressures. Even for those earning higher salaries who have already purchased an initial property, upsizing to a larger home to accommodate a growing family could become more difficult.
Tax Thresholds Frozen for 3 Years
In the Autumn Budget 2025, the Chancellor confirmed that income tax thresholds would be frozen for the next three years. Typically, tax thresholds rise with inflation or average earnings. However, by freezing them (a phenomenon known as 'fiscal drag'), pay increases are likely to push more households into the higher 40% tax band. While the Chancellor avoided raising income tax rates, the burden of tax will still be felt by many. This freeze is expected to raise as much as £8bn annually by 2029/30, increasing the number of higher-rate taxpayers to over 10 million—a record high.
Electric Vehicle Excise Duty
One of the major benefits of buying a new-build home is that many properties come with their own EV chargers, encouraging new homeowners to opt for electric or hybrid vehicles. However, the 2025 Autumn Budget introduces significant changes for owners of electric and hybrid vehicles. Starting in 2028, a mileage-based road tax will be applied to electric and plug-in hybrid cars. This will mean a charge of around 3p per mile for electric vehicle (EV) drivers and 1.5p per mile for plug-in hybrid drivers. On a positive note, the Electric Car Grant funding has received a boost and will remain available until 2029-30, helping first-time buyers purchase electric vehicles.
Cash ISA Allowance
Starting from 6th April 2027, the annual limit for tax-free savings in a cash ISA will decrease from £20,000 to £12,000 for individuals under the age of 65. However, for those aged 65 and older, the £20,000 limit for cash ISAs will remain unchanged. This reduction aims to encourage more individuals to invest in stock market-based investments, particularly in British stocks. It’s important to note that the overall ISA limit remains at £20,000 per year. Therefore, if you are under 65 and contribute the full £12,000 to a cash ISA, you can still invest £8,000 in a stocks and shares ISA within the same tax year.
However, there is concern that the reduction in the cash ISA allowance could discourage saving and investing altogether. This change may also create confusion around ISA transfers and the mechanics of stocks and shares ISAs, especially for those saving for a home deposit. Additionally, it’s worth noting that the Chancellor has confirmed a 2% increase in the tax rate on any savings held outside of an ISA or exceeding the annual ISA limit.
Mansion Tax Levy
The most significant change for the property market in the 2025 Autumn Budget is the introduction of a new Mansion Tax, officially called the High Value Council Tax Surcharge. This surcharge will come into effect in April 2028, based on property values as of 2026. Homeowners with properties valued over £2 million will be required to pay an annual levy of up to £7,500. Less than 1% of properties in England are expected to meet the £2 million threshold. The Valuation Office will be responsible for identifying the relevant properties, and moving forward, property valuations will occur every five years.
Looking Ahead: What’s Next for Housebuilders
Keep an eye out for our upcoming article on how the Autumn Budget 2025 will impact housebuilders. Significant changes within the housebuilding industry could affect new home prices or the timescales for property developments. In the meantime, numerous new build homes are set to complete across the country. If you’re planning to buy an energy-efficient home in 2026, now is the time to start searching for available properties.
