News > Budget 2025: Key Changes Explained

Budget 2025: Key Changes Explained

Wollit Team2 minute read · Updated 27th November 2025

The 2025 UK Budget has now been announced. Budget news can often feel confusing or too technical, but several of the changes this year will affect everyday money — things like your income, the support available to families, and how far your pay will stretch. This guide breaks down the main changes in a clear, easy-to-understand way.

Income Tax Thresholds Are Staying the Same

One of the biggest updates is that income tax and National Insurance thresholds are staying exactly where they are until at least 2030–31. That means the points at which you start paying tax — or move into a higher tax band — won’t rise in line with inflation.

What this means in simple terms: If your wages go up over the next few years, you could still end up paying more tax because the bands aren’t moving. So, even with pay rises, your take-home pay might not grow as much as you’d expect — especially when everyday prices are still rising.

This change affects almost everyone in work.

The Two-Child Benefit Limit Has Been Removed

The Budget also removes the old rule that only allowed families to claim child-related benefits for their first two children. Now, support will be available for all eligible children.

This is a major change for families with three or more children, many of whom have been managing higher food, childcare and housing costs without full financial support. It’s one of the few areas where the Budget brings extra help for households.

Changes to How Pension Salary-Sacrifice Works

The way salary-sacrifice pension contributions are taxed is also changing. Salary sacrifice is when part of your pay goes straight into your pension before tax is taken. The Budget reduces how beneficial this system is, especially for people who earn more and use it to save a lot.

Most people won’t notice a major difference, but if you’re in a workplace scheme that uses salary sacrifice, it’s worth checking your payslip or waiting for updates from your employer to see if anything shifts.

No New Cost-of-Living Payments

Unlike the past few years, there are no new one-off cost-of-living payments in this Budget. There are no new energy bill discounts, universal payments, or general support grants.

For many households, this means that the rising costs of food, transport and essential bills will continue without extra financial help from the government this year.

Some Taxes and Duties Are Going Up

The Budget includes increases to a few targeted taxes and duties, such as taxes on certain investment income or higher-value spending. These changes won’t affect everyday shopping or basic household bills, but they help the government bring in more money overall.

What This Budget Mainly Does

When you look at everything together, the Budget leaves most everyday taxes and payments the same, but adjusts a few key areas. The main things to know are:

tax thresholds are staying frozen for several more years
families with more than two children will now get full benefit support
salary-sacrifice pension perks are reducing
there are small increases to some taxes
there are no new cost-of-living payments

Nothing dramatic has changed for most people, but the freeze on tax thresholds and the lack of extra support mean budgets may continue to feel tight.

In Summary

Budget 2025 doesn’t introduce big new schemes or major tax cuts. Instead, it keeps tax thresholds the same, removes the two-child benefit cap, adjusts pension rules for some workers and adds a few targeted tax rises.

For many households, the most noticeable effect will be how frozen tax bands interact with rising prices — meaning income may not feel like it stretches as far. Families with more than two children will see positive changes, while most other people will see little immediate difference but may still feel ongoing cost pressures.

This simple guide covers the key changes shaping the year ahead.