Rachel Reeves stepped up to the despatch box on 26 November and delivered her second Autumn Budget.

You likely read our on-the-day update, featuring a rundown of all the key announcements from the chancellor’s speech.

Now that the dust has settled, here’s an in-depth look at a few key changes you need to be aware of, and what they might mean for your finances in 2026 and beyond.

1. A cap on National Insurance-efficient contributions made via salary sacrifice could mean you need to rethink your workplace pension from 2029

Under current pension rules, you can use salary sacrifice to contribute directly into your workplace pension before tax is taken. This effectively reduces your salary, meaning you pay less in Income Tax and National Insurance contributions (NICs).

Contributing using salary sacrifice can increase your take-home pay and is good news for your employer, too, lowering the National Insurance (NI) they pay.

From 6 April 2029, however, some of this efficiency will be lost. Rachel Reeves used her Autumn Budget to announce a salary sacrifice contribution cap of £2,000, above which, NICs will be payable for both employees and employers.

How we can help

While this change is still more than three years away, it’s understandable that you might be concerned about the measure’s impact on your pension savings.

With pension funds falling within the scope of Inheritance Tax (IHT) from 2027, now might be a good time to get in touch with us to discuss any worries you have.

2. You could see your tax bill increase after a rate rise on some types of income

Maintaining key manifesto tax pledges while also raising £22 billion (largely through tax rises) was never going to be easy.

Reeves kept the manifesto promise not to increase the headline rate of Income Tax and NI, but her Budget did include a rise to the tax rate payable on some forms of income.

From April 2026, the basic and higher rates of Dividend Tax will both increase by 2% (the additional rate remains unchanged). The move will make dividend income increasingly inefficient in tax terms, especially following successive reductions to the Dividend Allowance, which stands at just £500 for 2025/26.

Landlords will also be facing a tougher time in the coming years. Hot on the heels of the Renters’ Rights Act 2025, the rate of tax on property income will increase by two percentage points across all tax bands from April 2027.

From the same date, this increase (to 22%, 42%, and 47% respectively) will be matched by the tax payable on savings income.

The increases are expected to raise £2.2 billion in 2029/30.

How we can help

You might want to get in touch to discuss alternatives to dividend income, managing your property portfolio, or moving more of your savings into investments. The latter is especially important in light of the announcement of a cap on Cash ISA savings (for under-65s) effective from April 2027.

3. “Mansion tax”, or the High Value Council Tax Surcharge (HVCTS)

From April 2028, a new property surcharge will be paid alongside Council Tax. The High Value Council Tax Surcharge (HVCTS), more commonly referred to as the “mansion tax”, will begin at £2,500 for properties valued between £2 million and £2.5 million. The levy increases to £7,500 for properties valued at more than £5 million, with two other bands sitting in between.

Estimated to raise £400 million by 2031, the measure will affect less than the top 1% of properties, although the cash could still be hard to find for those who are asset-rich but cash poor.

How we can help

With this measure still a couple of years away, now is the time to budget for the additional expense. We can help you to free up funds and look at the impact of funding the charge from different areas of your finances.

Doing so while keeping your long-term plans on track is vital, so get in touch now.

4. An extended freeze to the Personal Allowance means continued fiscal drag and higher bills for many

The Personal Allowance – the amount you can earn before Income Tax becomes payable – has been frozen since 2021. Rachel Reeves used her Budget to extend the current freeze to 2031.

As your wages and other income have increased over the last five years (alongside the increased cost of living), tax thresholds have failed to keep pace.

This is known as fiscal drag, as it forces more earners into the tax regime, while others are pulled into higher tax brackets. This is now set to continue into the next decade, raising billions in additional tax from working people.

The chancellor had already extended the current freeze on IHT to 2030. The nil-rate and residence nil-rate bands will now also remain at their current rate until 2031, potentially pushing more estates into the IHT net on death.

How we can help

Long-term tax and estate planning are both key areas of your long-term financial plan, and that will remain the case as these tax squeezes take effect over the coming years. The Income Tax threshold freezes are particularly important in light of the imminent salary sacrifice changes, and previous announcements bringing unused pension funds into the scope of IHT on death.

In this changing tax landscape, a robust and adaptable plan is key, and professional advice can help here.

Get in touch

Please contact us if you have any questions about the impact of any Budget announcement. De Mellow’s expert financial planners are on hand to help.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select, and the value can therefore go down as well as up. You may get back less than you invested.

An investment in equities and shares will not provide the security of capital associated with a deposit account with a bank or building society. However, please bear in mind that over the long term, inflation will erode the purchasing power of your capital.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

SJP Approved 22/12/2025