AUTUMN BUDGET: Treasury summary

This is the executive summary from the Treasury’s full Budget document.

This Budget takes the fair and necessary choices to deliver on the government’s promise of change:

Cutting the cost of living by tackling inflation and taking around £150 off energy bills on average from April next year, and implementing a one-year freeze on regulated train fares and prescriptions charges.
Cutting the NHS waiting list in England, supported by 5.2 million more appointments delivered since the start of the Parliament and by creating 250 new Neighbourhood Health Centres.
Cutting debt and borrowing, to reduce the amount spent on debt interest rather than public services and to support the Bank of England to get inflation and interest rates down.

These choices strengthen Britain’s economic foundations and set the course for a secure future for the country.

Since the start of this Parliament, Britain has:

Outperformed growth forecasts, with growth in 2025 upgraded to 1.5% from 1% in March, and is on course to be the second-fastest growing economy among G7 countries.
Seen real wages increase more than in the decade from 2010.
Struck three trade deals, with the US, India and the EU. The India free trade agreement alone could increase GDP by over 0.1% in the long term.
Seen the Bank of England cut interest rates five times.

The choices taken at Autumn Budget 2024 and over the Parliament have begun to deliver on the government’s mandate for change:

Increased funding to fix the NHS has seen waiting lists fall, with 5.2 million more appointments delivered.
Provided over £120 billion in additional capital investment for roads, rail and energy, including £15.6 billion for major city-region transport. The Office of Budget Responsibility (OBR) estimates that the uplift in public investment will raise potential output by around 0.4% over 10 years.
Implemented ambitious regulatory reforms with a target to reduce the annual admin burden on business by £5.6 billion by the end of the Parliament.
Reformed the National Planning Policy Framework, delivering 170,000 additional homes and boosting GDP by 0.2% by 2029-30.

The government’s plans are underpinned by its non-negotiable fiscal rules which provide credibility by ensuring day-to-day spending is met with revenues, while allowing the step change needed in investment to grow the economy.

But, despite this progress, for many working people and businesses, the economy is not working well enough, and people are still struggling with the cost of living.

Reflecting historical economic underperformance, the OBR has revised down its productivity forecast. In isolation this reduces the amount of revenue the OBR expects the government to collect by around £16 billion in 2029-30.

The government is determined to outperform this forecast by continuing its plans to grow the economy, protecting public services and cutting borrowing.

But it is right to plan based on the independent forecaster’s judgements, meaning, despite Britain’s progress, the government needs to strengthen the public finances.

So at Budget 2025, the government is doubling down on its plans and the economic and fiscal strategy it set last autumn by:

Relentlessly pursuing growth to create a secure future through an ambitious growth strategy, including supply-side reforms. The OBR’s downgrade shows the imperative of this programme.
Taking the responsible choice to get borrowing down and increase the government’s fiscal buffers.
Fixing the failings of the welfare system to stop people being written off due to sickness and to lift 450,000 children out of poverty.
Protecting and strengthening the NHS and other public services while ensuring public money is well spent.
Making the tax system fairer and fit for 21st-century Britain.
Taking decisive action to cut the cost of living and bring down inflation.

Relentlessly pursuing growth

The OBR’s revised productivity outlook demonstrates the need for the government’s supply-side reforms. At this Budget, the government is going further:

Investing for the future: This Budget protects increased public investment over the Parliament and delivers the infrastructure needed to drive growth. The government is also investing almost £900 million to complete the publicly funded works for the Lower Thames Crossing; boosting capital investment in the NHS by £300 million; and establishing the Leeds City Fund as a 25-year Business Rates Retention Zone, underlining its commitment to the Northern Growth Corridor.
- The government is also making further planning reforms to accelerate delivery of housing and infrastructure; empowering local and regional leaders to boost growth in their areas; and strengthening the UK’s nuclear capacities to increase energy security.
Backing business and unlocking innovation: The government is making it easier for entrepreneurs to start, scale and stay in the UK, with tax changes to incentivise greater investment into scaling companies, a new UK Listing Relief from Stamp Duty Reserve Tax, and reforms to the UK research and development (R&D) system. This will support the UK’s modern Industrial Strategy. The high street will benefit from permanently lower business rates for retail, hospitality and leisure, funded by higher rates for the most expensive properties such as warehouses used by large online retailers. The government will also stick to the commitments set out in the corporate tax roadmap, to provide businesses certainty, and make targeted changes to the capital allowances treatment of main rate assets in a way that preserves the value of relief for future investment.
Unleashing talent and opportunity: The government is making over £1.5 billion available across the spending review period into the Youth Guarantee and the Growth and Skills Levy. This will tackle the elevated number of people not in education, employment or training (NEET) rates, with the Youth Guarantee ensuring all young people aged 16-24 years old have access to the support they need to earn or learn. Reforms to the visa system will make sure UK businesses have access to the brightest and best global talent.

Taking the responsible choice to get borrowing down and increase the government’s fiscal buffers

Budget 2025 continues to deliver the government’s fiscal strategy: putting the public finances on a sustainable footing to give businesses and households the certainty they need, while increasing investment to grow the economy:

The government is cutting debt and borrowing – keeping to its tough fiscal rules. The OBR confirms the government is meeting the stability rule in 2029‑30 by £21.7 billion and the investment rule by £24.4 billion, and meeting the stability rule a year early.
The government is more than doubling the buffer against the stability rule. A higher buffer means more stability for working people and businesses, by reducing the need to change tax and spending plans when there are changes in the economy.
Policy at this Budget means borrowing falls in every year of the forecast with the UK forecast to reduce borrowing by more than any other G7 country.

1.1 Fixing the failings of the welfare system to stop people being written off due to sickness and to lift 450,000 children out of poverty

The welfare system is not working as it should, forcing too many sick people out of work and on to benefits. Total spending on welfare grew by nearly a percentage point, as a share of GDP, over the last Parliament.

The government is reforming the welfare system to tackle its failings. To stop people being written off due to sickness, the government is:

Rebalancing Universal Credit (UC) rates so that it doesn’t pay to be off sick rather than work.
Tackling youth unemployment with a guaranteed job opportunity while commissioning Alan Milburn to conduct an independent report on young people, health and work.
Working with employers to support those who get sick to stay in work.

The government is also:

Announcing new reforms to the tax breaks available to Motability and other qualifying schemes, raising over £1 billion over the next five years.
Putting an end to those living abroad being able to buy cheap access to a UK State Pension.
Undertaking the Timms review of Personal Independence Payment.
Taking further action on fraud and error, saving £1.3 billion in 2030-31.

The welfare system is also failing children. The government is therefore scrapping the two child limit in Universal Credit (UC) to lift 450,000 children out of poverty. Growing up in poverty means that an individual is more likely to end up out of education, employment or training, with children growing up in poorer households earning around 25% less at age 30 than their peers. Poverty not only damages individual futures but the long-term health of the economy. Lifting the two child limit is the quickest and most cost-effective way to reduce child poverty over this Parliament. This measure is funded by policies in this Budget, including reforming Motability tax reliefs and clamping down on fraud and error in the tax and benefits systems, including by increasing the number of face to face health assessments.

1.2 Protecting and strengthening the NHS and other public services while ensuring public money is well spent

The government has prioritised improving public services, including investing an additional £50 billion in 2029-30 relative to the Spring Budget 2024 plans, and continue to invest an additional £120 billion in capital expenditure, consistent with the fiscal framework set at Autumn Budget 2024. As a result, the government is maintaining public investment at the highest sustained level in four decades at the Budget.

Every penny of public money must be spent wisely, and the state must play its part by becoming more productive. So, at this Budget, the government is introducing an additional efficiency and savings target for all departments to meet at the next spending review, resulting in £2.9 billion of savings in 2028-29, rising to £4.9 billion by 2030-31. These efficiencies and savings include:

Cutting the cost of politics: Abolishing Police and Crime Commissioners and reducing councillor numbers by around 5,000, saving over £250 million over five years.
Reclaiming £74 million from asylum accommodation suppliers; and the government has delivered nearly £400 million of Covid fraud benefits to-date and will relentlessly pursue more cases through the new Public Sector Fraud Enforcement Unit.
Further action to close the tax gap by pursuing those who try to bend or break the rules, collecting more unpaid taxes and modernising the tax system. This brings the total additional revenue raised by closing the tax gap this Parliament to £10 billion in 2029-30.

1.3 Making the tax system fairer and fit for the 21st century

The government is making the tax system fairer and fit for the 21st century. Everyone is being asked to contribute, but the government is keeping that contribution as low as possible by pursuing fair reforms that are long overdue.

Contribution: The government is maintaining personal tax thresholds and the National Insurance contributions (NICs) secondary threshold from 2028 until 2031 and the Plan 2 student loan repayment threshold from 2027-28 until 2029-30.

Fairness: One reason employees pay more tax is because Britain has not historically done enough to make sure assets – and income from assets – contribute fairly. Building on last year’s changes to Capital Gains Tax, inheritance tax, VAT on private school fees and reform of the non-domicile regime, this Budget continues to sustainably raise further revenue from sources of wealth:

The government is raising taxes on property, dividend and savings income, reflecting the fact that income from those sources faces no equivalent of National Insurance that employees pay. Existing allowances will continue to protect those with low to middle amounts of such income.
The average Band D family home pays more in Council Tax than a £10 million property in Westminster, so this government is introducing a High Value Council Tax Surcharge on homes worth over £2 million.

Some tax reliefs that disproportionately benefit the wealthy and higher earners have significantly risen in cost in recent years. The government is therefore reforming them:

By capping NICs relief on salary sacrifice into pension schemes to the first £2,000 of pension contributions per person from 2029. The costs of this relief were set to increase from £2.8 billion in 2016-17 to £8 billion by 2030-31 without reform, and use of these arrangements has disproportionately benefitted higher earners. The cap shields 74% of basic rate taxpayers using salary sacrifice, and the government continues to support pension saving through auto-enrolment and tax relief, worth over £70 billion per year.
The government is restricting Employee Ownership Trust Capital Gains Tax relief from 100% to 50%. This is because this scheme is on course to cost £2 billion, 20 times beyond the original costings when the scheme was announced in 2013.

Modernisation: The government is making the tax system fit for the 21st century:

All cars contribute to wear and tear on the roads, so it is only right that motoring taxes cover electric cars via a modest self-reported per-mile levy.
Raising taxes on online gambling – which has grown substantially over the years, alongside gambling harms – while protecting face-to-face gambling, from bingo halls to horse racing.
Preventing ride-sharing taxi apps from exploiting an administrative scheme intended for tour operators in order to pay a lower rate of VAT than others.
With the rapid rise in cross-border e-commerce, some online retailers are being placed at an unfair advantage due to the UK’s customs duty relief for low-value imports. This Budget is removing that relief to support Britain’s businesses and high streets.

1.4 Taking decisive action to cut the cost of living and bring down inflation

Families across the UK are feeling the squeeze of still too high inflation. The Budget delivers a set of measures to remove around £150 of costs on average from household energy bills from April next year.

Energy costs will be reduced by the ending of the Energy Company Obligation, which is currently funded through bills, and through the government funding 75% of the domestic cost of the legacy Renewables Obligation for three years. This is on top of extending the £150 Warm Home Discount to a further 3 million of the poorest households.

And the Budget goes further by:

Introducing a one-year freeze of regulated rail fares – for the first time in 30 years – saving commuters on the more expensive routes more than £300 per year.
Implementing a one-year freeze on prescription charges, keeping fees at £9.90 for a single charge.
Extending the 5p fuel duty cut until the end of August 2026 with rates then gradually returning to March 2022 levels by March 2027. The planned increase in line with inflation for 2026-27 will also be cancelled. Alongside the introduction of Fuel Finder, these measures are expected to save families £89 next year compared to previous plans.
Increasing the National Living Wage for the lowest paid to £12.71 per hour in April 2026.
Supporting the incomes of over 12 million pensioners through a commitment to the Triple Lock for the duration of this parliament. In April 2026, the State Pension will be uprated by 4.8%, so pensioners will receive up to an additional £575 a year.

The Budget package directly cuts inflation by 0.4 percentage points next year. This is the biggest near-term reduction in inflation due to government policy ever forecast by the OBR at a single fiscal event, outside of a crisis.

This Budget takes fair and necessary choices – but those choices are for a purpose: building a stronger, fairer country, where living standards rise, child poverty falls and public services are rebuilt in every corner of Britain.