Autumn Budget 2025 - What it could mean for you and your next home

The Chancellor delivered her Autumn Budget last week, and despite plenty of trepidation, leaks and market testers, it appeared to prioritise stability, with no immediate or bold changes announced.

For the housing market, the big shock was that there were no big shocks, many of the rumoured changes did not come to fruition, or were not as detrimental as many had anticipated. The main changes impacting property and later living were:

Stamp Duty

There were many rumours about potential changes to stamp duty, from relief for first and last time buyers to wholesale stamp duty reform, none of which were announced this year. Whilst it is disappointing that there was no incentivisation to those considering downsizing, it’s positive that with little change in this area many people who may have been stalling a move for fear of big changes can carry on knowing what they will need to pay. 

Mansion Tax

The much hyped mansion tax was announced, however the value of the taxes were less than what had been feared. Properties over £2m in value will incur a property tax of £2,500 per annum, which will increase up to £7,500 per annum for properties over £5m. The surcharge will apply from April 2028, following a targeted valuation exercise by the Valuation Office in 2026. 

Inheritance Tax

There were no changes to inheritance tax announced this year. This will cause great relief to those who may have made changes to their plans following the previous announcement to inheritance tax on pensions, and allows for some stability in this area. 

State Pension

The State pension will rise in line with inflation. The new State Pension (for those who took the pension from April 2016) will rise to £12,547.60 per year from April 2026, an increase of £574.60. The basic State Pension (pre-April 2016) will rise to £9,614.80 per year from April 2026, an increase of £439.40.

Dividends, Savings and Property income tax

The amount of tax you pay on income generated from dividends, interest from savings or property rental income, will be increasing from April 2026 and April 2027. The majority of people with small amounts of savings, dividends or property income won’t see a big change as the tax free allowances still apply, but those with larger amounts will pay more. 

• Dividend tax: From April 2026 the basic and higher rates will each rise by 2% (to 10.75% and 35.75%). The additional rate stays at 39.35%.

• Savings income: From April 2027 the tax rate on savings interest will rise by 2% across all bands (to 22%, 42%, and 47%).

• Property income: A new, separate tax rate for property income will apply from April 2027: 22% (basic), 42% (higher), and 47% (additional) in line with savings income tax.

Cash ISA changes

From April 2027, the annual limit for Cash ISAs will be reduced to £12,000 for savers under 65. The overall ISA limit (£20,000) stays the same, but only those aged 65 and over can put the full £20,000 into a Cash ISA. If you’re 65 or over, nothing changes—you can still put the full £20,000 into a Cash ISA.

Summary

Our main take away from the budget announcement is that the direction of travel has been made quite clear. The Government must generate income and by imposing a mansion tax to the top tier of the housing market, as house prices are expected to rise year on year, more properties will enter into the additional tax bracket and more taxes will be paid. 

In April 2025, real estate agency Savills, found that UK homeowners aged 60 and over hold an estimated £2.95 trillion in housing wealth, more than half of the UK's total housing wealth. Whilst we cannot speculate, we would anticipate more change to the top tier of the market and those over 60 having additional property taxes to benefit from their wealth in the years to come.

Now could well be the right time to rightsize, to get ahead of any potential changes and start enjoying your new home and lifestyle.