Chancellor Rachel Reeves’ 2025 Autumn Budget focused on strengthening the public finances while increasing contributions from income generated through savings, investments and long-term wealth.
For employed individuals, the Budget didn’t introduce dramatic changes to headline income tax rates - but several measures will still affect take-home pay, long-term planning and the value of existing financial arrangements.
In this blog, we highlight some of the key points to be aware of and how they affect future wealth creation.
Income Tax: Rates Remain the Same, but Planning Still Matters
There were no changes to core income tax rates in the Autumn Budget.
However, for many employed individuals, this does not mean their tax position remains unaffected.
While rates remain unchanged, income tax thresholds have been frozen until April 2028. As a result, more people are likely to pay a higher proportion of tax over time as earnings increase - a phenomenon often referred to as “fiscal drag”.
As wages continue to rise, frozen thresholds become an increasingly important consideration. Without proactive planning, incremental pay increases can push earnings into higher tax bands or reduce the value of personal allowances, diminishing the real benefit of salary growth.
This makes tax-efficient planning, particularly for higher earners, an ongoing priority rather than a one-off exercise.
Higher Taxation on Savings, Investments and Additional Income
From April 2026, the Budget introduced a 2 percentage point increase in tax rates on:
- Savings income
- Dividend income
- Property income
While these changes don’t directly affect salary income, many employed individuals - particularly higher earners - supplement their income with investments, shareholdings or savings.
The impact may include:
- Lower net returns on savings and investment income
- Reduced income from dividend-producing portfolios
- Greater importance placed on tax wrappers such as ISAs and pensions
For those building wealth alongside their employment, these changes could gradually erode long-term returns if left unaddressed.
Pensions and Salary Sacrifice: Future Changes Ahead
Pensions remain one of the most effective ways for employed individuals to save for the future, especially when combined with employer contributions and salary sacrifice arrangements.
However, the Budget confirmed that from April 2029:
- National Insurance relief on pension salary sacrifice will be limited to the first £2,000 per year
- Contributions above this level will still receive income tax relief, but without the NI saving
While this change is several years away, it reinforces the importance of understanding how pension contributions fit into a wider long-term plan - particularly for higher earners who currently rely on salary sacrifice to reduce tax.
Why Long-Term Financial Planning Matters More Than Ever
For employed individuals, the Autumn Budget highlights a familiar trend: long-term financial outcomes are shaped less by sudden changes and more by gradual shifts over time.
Rising taxation, evolving pension rules and inflationary pressures all underscore the need for a structured, forward-looking plan.
This includes:
- Making full use of tax-efficient savings and investment options.
- Ensuring pension contributions remain appropriate and effective.
- Planning ahead for retirement income, not just retirement savings.
- Reviewing protection and estate planning as wealth grows.
Closing Thoughts
The 2025 Autumn Budget didn’t dramatically change income tax for employed individuals, but it did reinforce the direction of travel for personal finances.
Higher taxation on savings and investments, future changes to pension efficiency and ongoing cost pressures mean that careful planning remains essential - particularly for higher earners.
At Two10 Investment Services, we help individuals understand how Budget changes affect their personal finances.
We specialise in helping our clients build clear, long-term plans with confidence.
If you’d like to review how the Autumn Budget impacts your financial position, get in touch to arrange a consultation.
*Investments can go down as well as up and you might not get back the capital invested.
*Understanding your risk tolerance, assessing your capacity for loss and completing a suitability assessment are essential before proceeding with any investment or financial plan.
*Two10 Investment Services, does not give tax or legal advice but works with clients and their specialist tax and legal advisers. We recommend that clients should always take independent tax and/or legal advice on important matters and keep us informed of any considerations they would like us to take into account.
