UPDATE: In just a few weeks, the UK government will unveil significant changes to personal finances that could impact millions. On November 26, 2025, Chancellor Rachel Reeves is expected to announce a series of economic policies, including potential tax hikes and alterations to savings allowances, that could leave many families feeling the pinch.
The Labour government faces escalating pressure over its upcoming budget, particularly concerning its manifesto pledges. Lucy Powell, the party’s deputy leader, recently urged the government to adhere to its commitment not to raise income tax, VAT, or national insurance. However, with a reported £20 billion ‘black hole’ in the nation’s finances, Reeves insists tough decisions are unavoidable.
“As I take my decisions on both tax and spend, I will do what is necessary to protect families from high inflation and interest rates,” Reeves stated in a recent address. “If we are to build the future of Britain together, we will all have to contribute to that effort.”
The anticipated changes could drastically alter how much you pay in taxes and how much you can save. Key proposals include:
Income Tax Increases
Speculation about potential tax hikes is rampant. Although no official confirmation has been made, reports indicate that a 2p increase in income tax is under consideration, alongside a potential 2p cut in national insurance. This would mark a significant shift, especially since Labour pledged during the 2024 election not to raise these taxes.
ISA Allowance Review
Another possible change involves the annual allowance for Individual Savings Accounts (ISAs). Currently capped at £20,000, reports suggest Reeves may propose reducing this limit by up to £10,000, effectively halving the amount individuals can save tax-free. Alternatively, the cut could be less severe, potentially reducing the allowance by £8,000.
Fuel Duty Increase
Since 2011, fuel duty has been frozen at 57.95p per litre, with a 5p discount introduced in 2022. As this discount is set to expire in March 2026, many are concerned it may be scrapped entirely, leading to higher fuel prices. The government may, however, consider a smaller reduction of just a few pence per litre.
New Charges for Electric Vehicle Drivers
As part of efforts to create a fairer system for all drivers, new taxes for electric vehicle (EV) owners could be on the table. A spokesperson indicated that a new pay-per-mile charge might be introduced by 2028, potentially costing EV drivers 3p per mile. Hybrid vehicle owners could face similar but reduced charges, despite ongoing government efforts to promote EV adoption.
With these proposals looming, the budget announcement is crucial for households across the UK. The financial implications of these changes could resonate deeply, affecting everything from daily commuting costs to long-term savings strategies. The Labour government’s ability to balance economic needs against public sentiment will be tested.
As November 26 approaches, all eyes will be on Reeves and her team. The outcomes of these decisions will determine how families manage their finances in the coming months. Stay tuned for further updates as this story develops.
