While some of the headline policies include a new ‘mansion tax’ and and an increase to tax on investment income, we’re going to look at some of the points that will have a more direct impact on everyday people and businesses.
Salary Sacrifice Cap
One highlighted policy that comes as part of the 2025 autumn budget is the introduction of a £2,000 salary sacrifice cap. This change will mean that any pension salary sacrifice contributions that exceed £2,000 per employee per year will no longer be NIC exempt.
This discourages both employers and employees from exceeding this limit, as extra NIC will be introduced for those who are paying above the new cap.
But this does not mean that you should not be investing in your future. Instead, it prompts for a change in mindset about exactly what investing in your future can look like. It is clear that a salary sacrifice in order to boost your pension is an investment in your future – but how you look after your mind & body today is equally (if not more) as important. When you do reach retirement age, you will want to make sure you make the most of that time by being fit & healthy; investing in a healthy lifestyle today by practicing mobility and keeping a sharp mind is the ultimate investment any of us can make.
Income Tax
The latest budget includes a freeze to income tax thresholds until 2030/2031. While, at face value, this seems like a change that will ultimately benefit the population at large, the consequences here is that people will end up paying more of their paycheck back to the government.
The phenomenon is known as ‘fiscal drag’ and comes as a result of combining a freeze in income tax thresholds with pay rises over time. This policy is expected to result in nearly 1 million people being pulled into higher tax rates
The practical consequences here mean that employees will be looking to their employer to offer alternative benefits, such as health-oriented workshops or travel subsidiaries.
Cash ISA Limits
As of April 2027, the total amount you’ll be able to save in a cash ISA will be reduced from £20,000 to £12,000. This change aims encourage people to spend & invest their money as opposed to holding onto cash – ultimately driving economic growth.
This policy highlights a motivation from the government to see increased spending, which raises the question: what should you spend your money on? When it comes to investing, there should be no doubt that there is nothing better to invest in that yourself. With a self-reported obesity prevalence 29% of the population, sitting 10% above the OECD average, it’s clear that a shift to a more physcially & mentally healthy populous is needed. Simple activities to get you moving such as hikes, bike rides and engaging in sport will improve physical health, boost self-esteem and can lead to a cascade of positive outcomes.
Conclusion
The UK autumn budget of 2025 contains a range of policies that will impact both individuals and businesses, with the Chancellor claiming this is a budget for a ‘stable economy’. While that may be up for debate, one unavoidable fact is that individuals and businesses should recognise health & wellbeing as an increasingly important currency, in a time when cash is becoming more expensive & heavily taxed.
