Budget 2025: What it means for you

Rachel Reeves has delivered her long-awaited Budget - her second as chancellor.

So what were the big announcements that might affect you?

Two-child benefit cap scrapped

Since April 2017, parents have only been able to claim child tax credit or universal credit for a maximum of two children per household.

But the government has confirmed the two-child benefit cap will be lifted from April 2026.

£150 cut to energy bills

The Energy Company Obligation (ECO) scheme, which was set up to tackle fuel poverty under the Conservatives, is to be scrapped.

The chancellor says that for 97% of families in fuel poverty, the scheme has “cost them more than it has saved”.

As a result, she believes ending it will cut £150 from the average household energy bill.

Tax thresholds frozen

The freeze on income tax thresholds will be extended by three years until April 2031.

So although income tax isn’t going up, it does mean more people will pay higher rates as their pay goes up.

Fuel duty to be frozen

Fuel duty will remain at its current rate until September next year.

Minimum wage to increase by 4.1%

From April, the national living wage will increase by 4.1% to £12.71 an hour.

This will apply to full-time workers aged over 21 and works out to a pay increase of £900 a year.

Meanwhile, the national minimum wage rate for 18 to 20-year-olds will go up by 8.5% to £10.85 an hour.

And workers aged 16 and 17 and those on apprenticeships will see a 6% increase, taking the minimum wage up to £8 an hour.

Rail fares to be frozen

The price of season tickets, peak returns for commuters and off-peak returns between major cities will remain unchanged in 2026.

This is the first time rail fares in England have been frozen in 30 years.

Help to Save scheme to be expanded

Help to Save, a scheme to help people on low incomes boost their savings, is to be made permanent and opened up to parents and carers from 2028.

Cash ISA allowance cut to £12,000

At the moment, people can save up to £20,000 tax-free either in a cash ISA or a stocks and shares ISA.

But from April 2027, the cash ISA allowance will be cut by £8,000, except for over-65s, with this money instead designated for investment.

Luxury vehicles removed from Motability scheme

People with disabilities will no longer be able to get luxury vehicles through the Motability scheme.

Reeves said this will help get the scheme “back to its original purpose of offering cost effective leases to disabled people”.