Autumn Budget 2025: What it means for you

Key takeaways:

• Cash ISA limit will drop from £20,000 to £12,000 from April 2027 - meaning less tax-free savings in cash. The overall tax-free allowance still stay at £20,000 however.
• A new "mansion tax" will apply to houses over £2 million, but payments deferred until moving or inheritance.
• Ongoing uncertainty in the housing market will continue. Therefore, seeking expert advice is more important than ever!

Let's dive into what these changes mean for you.

A big shake-up for savers: The ISA overhaul

Individual Savings Accounts (ISAs) have long been a go-to for tax-free saving. Until now, you could put away up to £20,000 cash per tax year without paying a penny of tax on the interest. But that’s changing.

From April 2027, the overall ISA limit will stay at £20,000, but savers will only be able to put up to £12,000 in a Cash ISA. The remaining £8,000 has to go into a Stocks and Shares ISA. However, over 65s will be allowed to retain their full £20,000 allowance in cash savings.

This move is designed to encourage more people to invest in UK companies, giving the economy a potential boost.

Our take?

This change seems unfair for cautious savers, especially those with lower incomes who rely on the guaranteed safety of cash savings.

While investing may give you higher returns in the long run, this isn't guaranteed, and it may feel too risky for many.

Plus, some savers may feel uncomfortable investing money meant for important, but short-term goals such as saving for a house deposit, or a wedding. Investing is best suited for long-term goals, as it gives your investments the chance to ride out any possible short-term market swings.

What does this mean for you?

• Not used up this tax year's allowance? Now is the time to do so while you can still save up to £20,000 in cash savings. Make sure you're saving with a competitive account - like our Easy Access Cash ISA, or market-leading 1 Year Fixed Rate ISA - so your money is working as hard as possible.
• Already reached your ISA limit? If you don't want to invest, take a look at other general savings accounts with competitive interest rates. With our HomeSaver account, you'll benefit from our market-leading 5.5% AER (variable) savings rate, plus our Best Mortgage Deal Guarantee*.

A "mansion tax" for high-value homes

A new "mansion tax" is being introduced for homeowners of properties over £2 million, potentially affecting about 150,000 households. This will consist of an annual charge of:

• £2,500 for properties worth more than £2m
• £7,500 for properties worth more than £5m

The good news is homeowners won’t be forced to sell to cover the tax, as payments can be deferred until the property is sold or passed on.

Our take?

The aim is to raise revenue, but the levy could add uncertainty and slow down the housing market, particularly for properties at the top end.

How will the Autumn Budget affect mortgage rates?

There are a couple of ways the changes announced in the Budget could have a ripple effect on mortgage rates and the wider property market. The new "mansion tax" could put the brakes on property transactions at the top of the market, which could impact house sales further down, particularly in areas like London and the South East. While the cut to the annual Cash ISA limit could result in tighter lending from building societies, which rely on cash deposits to fund loans.

Since the Budget, we've also seen some high-street lenders cut the rates on their fixed-rate mortgage deals. With inflation falling to 3.6%, dropping for the first time in five months, there's renewed hope for a base rate cut at the 11th December MPC meeting. The Office for Budget Responsibility (OBR) now expects inflation to average about 2.5% in 2026 - down from recent highs.

What does the Autumn Budget mean for house buyers?

Inflation and interest-rate shifts go hand-in-hand, and that affects mortgages and borrowing power. If inflation stays elevated, lenders might stay cautious - which could keep mortgage and borrowing costs higher than in “cheap-money” times. For those buying soon, it’s more important than ever to budget for interest rates above historic lows.

However, there is some good news. The OBR predicts that the increase in property income tax rates from April 2027 could reduce house price growth by around 0.1% points each year from 2028. For aspiring first-time buyers, this could make it easier to get onto the ladder, as you won't have to worry about house prices outpacing how much you're trying to save. For those moving up the ladder, while this might mean your own property doesn't go up in price as much as you might hope, it could make moving up the ladder easier.

As always, seeking advice from a mortgage expert can help you find the best options for you amid this market uncertainty.

What does the Autumn Budget mean for savings accounts?

With inflation still elevated, the spending power of cash you leave sitting in savings could be slowly eroded, especially if your account pays less than 3-4 % interest. If you’ve got money in low-interest savings accounts that aren’t beating inflation, its real value could shrink over time.

On the bright side: Higher interest rates tend to follow higher inflation (as lenders react), which can make saving more appealing - but you’d still want to watch that the rate keeps up with inflation.

What you should do now

• Savers: If you’re a Cash ISA saver, make the most of the £20,000 cash allowance while you can. If you've maxed out already, explore other general savings accounts with a competitive interest rate - like our HomeSaver, offering 5.5% AER (variable). If you're considering investing more, do your research or talk to an adviser about the risks and rewards.
• First-time buyers: Although the new 'Mansion Tax' shouldn't be a concern for the average first-time buyer, the incoming property tax changes could slow down the property market if we see asking prices rise as a result.
• Home movers: The new property taxes could impact your buying power when you sell - or cause your home to be valued at less than the agreed sale price. Make sure to price your home correctly to stay competitive. It may also be worth considering professional tax advice to understand your exposure to the changes.
• Remortgagers: If your home is high-value, you’ll want to factor in the extra costs - new annual taxes, potential capital gains implications, and how lenders might see your borrowing capacity under the new regime. As you compare remortgage deals or apply for a new mortgage, build those future costs into your calculations so you’re not caught out later.

With changes now confirmed, it’s never been more important to get ahead. By being proactive and staying informed, you can navigate these changes - and keep working toward your next savings goal or house move. As details of some reforms are rolled out, we’ll keep you posted on exactly how they apply to you and your finances.