How will the Budget affect my money?

Chancellor Rachel Reeves set out Labour’s tax and spending plans on 30 October, saying she was “deeply proud” to be the first female chancellor.

Lots of rumours and speculation beforehand made people worry about what the announcements would mean for their money. Whilst it’s true that the Budget raised taxes, most of the changes apply to businesses rather than individuals directly.

I’ve picked out five important things that affect finances for women and their families.

No income tax rise, but bands stay frozen

The amount of tax you pay depends on your own income. Most people can earn a chunk tax-free, and then the next slices or ‘bands’ of your income are taxed at different rates.

While income tax didn’t go up, the amounts we can earn tax free and before hitting higher rates of income tax will remain the same until April 2028.

The band you can earn tax-free – known as the Personal Allowance – will stay frozen at £12,570 until April 2028. The same goes for the starting point at which higher rate tax (40%) kicks in – the starting point of this band will remain at £50,270.

Normally these bands increase by inflation each year, meaning we can all earn a little bit more before we must pay tax. But by the time we get to 2028, we’ll have seen six years of the freeze. As wages have risen in that time, more people will be pushed into higher rates of taxes or paying tax for the first time.

Further changes to child benefit scrapped

Even though it could make the rules fairer for families, the government has scrapped plans to allocate child benefit by household income rather than looking at individual incomes.

The last government announced plans to reduce the previous unfairness of the system for a single-income family. Currently, two working parents can each earn £59,000 and get the full child benefit but a parent in a single-earner household on £80,000 would get nothing – despite the household income being much lower. A note buried in the Budget documents confirmed these changes won’t be going ahead because they’d cost too much. There will be improvements to how overpayments are collected, which aims to ease some of the admin burden of how child benefit is clawed back.

Stamp duty bills to go up from April

Currently, first-time buyers can pay reduced stamp duty rates if they buy a property worth £625,000 or less. No stamp duty is paid on the first £425,000 of the value of the property, with 5% stamp duty on any remainder up to £625,000.

It’s confirmed that from 1 April 2025, the property value limit (to get the discount) reduces to £500,000 and you’ll only get the first £300,000 of the value of the property stamp duty free, with 5% paid on any remainder up to £500,000.

Our calculations show that a first-time buyer buying at the current limit of £625,000 will face a £11,250 hike to their stamp duty bill from April, as they would no longer be eligible for the first-time buyer tax break.

For those moving onto their next home, the rates will rise too. Currently the first £250,000 of a property purchase is free of stamp duty, and then you pay it at 5% on any amount up to £925,000. However, from April, only the first £125,000 of property purchase will be stamp duty free, with a 2% rate charged from £125,000 to £250,000 and then 5% on £250,000 up to £925,000.

The re-introduction of the 2% band means people buying their next home will face an increase of up to £2,500 to their stamp duty bill.

ISA and pension allowances stay the same

The amount you can pay in across different types of ISAs every year remains at £20,000. The Junior ISA allowance stays at £9,000.

What you can pay into your pensions stays the same and there has been no change to the amount people can take tax-free from their pensions when they come to access them in later life.

Both ISAs and pensions shield your money from income tax and taxes on investment gains, which leads me to my fifth and final point…

Higher taxes on investment gains

The tax people pay on investments held outside of an ISA or pension (capital gains tax) has gone up in the budget. You get a tax-free allowance for gains outside of ISAs and pensions of £3,000 a year. The rate of tax on gains above this has gone up to 18% or 24%, depending on your income for the year.

This change won’t affect everyone, but it does mean accounts like ISAs that shield your money (and gains) from tax have become even more important for people investing their money. There are different flavours of ISA you can choose from to meet your needs. Read more in our article: How do I pick the right ISA for me?