Budget 2025: What Today’s Announcement Means For Islanders

Dominic Kureen
Nov 26
2 min read

Chancellor Rachel Reeves has set out her long-anticipated full Budget today (Wednesday), unveiling major tax changes, welfare reforms and funding commitments that will affect households and businesses across the Isle of Wight.

Here are some of the important aspects of today's update at a glance.

Key Tax Changes

Tax thresholds frozen until 2028, meaning more workers could drift into higher tax bands over time — a move expected to raise £8bn.
Gambling taxes increased, with remote gaming duty rising from 21% to 40% and online betting tax increasing from 15% to 25%. Bingo tax will be scrapped from April.
New mileage tax on electric vehicles: 3p per mile for EVs and 1.5p for plug-in hybrids from 2029.
Dividend, property and savings tax rates up by 2 percentage points, raising £2.1bn.
Inheritance tax allowances frozen, extending the current pause.
Mansion tax introduced for homes worth over £2m — between £2,500 and £7,500 per year.

Support and Cost-of-Living Measures

Two-child benefit cap to be scrapped in April 2026, which the government says could lift around 450,000 children out of poverty.
State pension to rise by £440 (basic) and £575 (new state pension) per year.
Energy bills cut by £150 from April as some levies are removed.
Fuel duty frozen until September 2026.
Minimum wage rising 4.1% to £12.71 an hour for over-21s; £10.85 for 18–20s.

Savings, Pensions and Loans

Cash ISA allowance cut from £20,000 to £12,000 — though over-65s keep the full limit.
Salary-sacrifice pension contributions above £2,000 to attract National Insurance from April 2029.
Student loan repayment threshold frozen for three more years.

Transport and Local Impact

Rail fares frozen nationwide — the first time in 30 years.
Uber and Bolt journeys to be taxed, described as a new “taxi tax”.
Luxury cars removed from the Motability scheme.

Island businesses may also be affected by:

Business rate cuts for 750,000 retail, hospitality and leisure properties, funded by higher rates on sites worth over £500,000.
Stamp duty holidays for companies newly listed on the London Stock Exchange.

Growth and Investment

The OBR expects slower economic growth next year (1.4%) and inflation of 3.5% this year, falling to 2.5% in 2026. Government plans also include:

£300m for NHS technology and 250 new neighbourhood health centres across England.
£13bn in flexible funding for regional mayors and additional funding for devolved governments.