The Budget 2025 debunked for buyers & sellers

The most hyped Budget in history? Perhaps but in spite of the speculation and expectancy, it was actually an Office for Budget Responsibility document leak an hour before the announcement that caused the biggest stir.

Grand plans scaled back, public-appeasing initiatives and last-minute backtracks possibly shaped the Budget in its final days, proving that what was forecast by the experts rarely turns out to be the reality. Here’s our guide to the fiscal drags, the tax freezes and revenue generators that will affect the property market. 

What has changed

ISA shake up: many first-time buyers save for a deposit by putting money into an ISA but how much money can be saved and where it goes is set to change. The overall annual ISA allowance of £20,000 will stay the same but people will be limited to saving £12,000 in a cash ISA annually. 

Anything between £12,001 and £20,000 must then be saved in a stocks and shares ISA to encourage investment. Those with a bullish attitude to risk will have an advantage, with the full £20,000 tax-free allowance remaining for stocks and shares ISAs. This announcement will affect those under the age of 65 from April 2027. For now, LISA rules remain unchanged but the Chancellor announced a review of this first-time buyer savings vehicle in 2026.

Landlords to pay more income tax: while the masses escaped an increase to income tax on wages, landlords will find themselves paying more on rental income. Property income tax rates will increase from April 2027 – lifting them 2% above current rates. Basic, higher and additional rates will rise to 22%, 42% and 47%, respectively.

A mansion tax for the most valuable properties: an idea that has been bandied about by previous Governments finally made it into a Budget speech. The mansion tax will become a new, annual levy from 2028, paid by owners of England’s most valuable homes. Homes worth more than £2 million will be subjected to a yearly surcharge of anywhere between £2,500 and £7,5000 – a sliding scale based on each home’s value.

The tax is designed to raise more than £400 million by 2031, although it will only apply to the top 1% of properties. Properties in council tax bands F, G and H will be re-evaluated, tipping more homes into higher bands - especially since current bands in England are based on values as of April 1991.

What remains the same

Income tax thresholds frozen: while the general public may feel a sense of relief when income tax thresholds stay the same and the percentage of tax not increased, it is a false economy. The Chancellor announced income tax thresholds will be frozen at current levels until 2031. 

This comprises a tax-free personal allowance of £12,570, a basic rates of 20% applied to earnings between £12,571 and £50,270, a higher rate of 40% applied to earnings between £50,271 and £125,140, and an additional rate of 45% applied to earnings above £125,140. In practice, those just below the current thresholds may be dragged into higher tax bands due to future wage rises and additional income from sources such as property investments.

Stamp duty rates: the Budget run up was full of rumour that stamp duty would be scrapped in favour of a seller’s tax but this idea never materialised. The chancellor also left the current stamp duty rates unchanged. While first-timer buyers would have liked the nil rate to increase, investors will have breathed a sigh of relief that additional property stamp duty wasn’t increased. 

Inheritance, corporation & capital gains tax unchanged: the Chancellor chose to partly keep her ‘no tax hikes’ pledge by leaving certain taxes unchanged. Forecasts were gloomy but the current rates of inheritance tax, corporation tax and capital gains tax remain as is. This should bring comfort for those going through probate, for investors who hold buy-to-lets in limited companies and for landlords disposing of assets. 

Council tax bands A to E: there will be no wholesale re-evaluation of council tax bands, even though it was a very tempting proposition. Only bands F, G and H will be re-evaluated ahead of the new mansion tax. Current council tax bands were set using property values generated in 1991.

If you have any questions about how the Autumn Budget will affect your property plans, please contact us.