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Wednesday 26 November 2025 13:22, UK
Here in Money we’ll focus on what it means for you – with a Q&A at 4.30pm featuring a panel of consumer experts and our own Money reporter Jess Sharp.
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Our Money team is still assessing what the leaks from the Office for Budget Responsibility – and the budget itself – mean for you.
Point 3.22 is an important one for students and more recent university leavers.
It says:
“The government has announced a freeze to the repayments and interest rate thresholds for Plan 2 student loan repayments for three years starting from 2027-28.”
Plan 2 is for undergraduate students who started courses between 1 September 2012 and 31 July 2023.
In short, it means the point at which people start paying back their loans remains unchanged until 2030.
The OBR says that these changes will increase cash receipts by £400m a year in the medium-term as a higher proportion of income will be subject to repayment and a higher interest rate.
It also will result in a one-off reduction in borrowing in 2026/27 of £5.6bn related to reduced spending, the OBR says.
The amount you can save in a tax-free cash ISA has been slashed from £20,000 to £12,000 in the budget. 
The cut will come into effect from April 2027, but it will not affect over-65s, who will be allowed to stick to the £20,000 limit. 
Chancellor Rachel Reeves hopes the cut will get savers investing and help boost the economy, but experts have warned it could have a detrimental effect and put people off saving completely. 
In the lead-up to the budget, banks, building societies and campaigners warned it could force people to pay more tax. 
So, will it? Here we explain what a cash ISA is, what’s changed and what impact it could have on your savings. 
What is a cash ISA?
It’s a tax-free savings account, meaning you don’t have to pay tax at all on any interest you earn. You could deposit up to £20,000, but Reeves has cut this to £12,000 from April 2027. 
Some cash ISAs are instant access, while others require you to lock money in for a certain period of time to get higher interest rates.
What does this mean for savings? 
It’s important to stress that the full ISA limit – the amount you can deposit across three types of tax-free ISA accounts (cash, innovative finance, and stocks and shares) – is staying at £20,000.
But if neither of the other ISA options appeal (you may be a more cautious saver who doesn’t want to put money in stocks that can go up and down), you’ll have to look for another savings account once you get to £12,000. Bonds would be one option – but these aren’t tax-free. 
The amount you could have to pay depends on your personal savings allowance. 
Basic rate taxpayers are allowed to earn £1,000 in interest before paying income tax at 20%.
Higher-rate taxpayers can earn £500 in interest before paying tax. 
Tax benefits aside, the change will mean you’ll earn less interest in a cash ISA. 
Here’s an example… 
You have £20,000 in savings, and you are happy to lock it away for a year. 
Under the old cap, you would be able to place all of that money into a one-year cash ISA. 
The highest interest rate on offer is 4.28%, according to The Private Office, meaning you would earn £856 of tax-free interest. 
But under today’s changes, you can only add up to £12,000 into it, meaning the interest earned drops to £513.60. 
Let’s say you put your remaining £8,000 into the top-paying one-year bond, which is offering 4.5%, rather than an innovative finance or stocks and shares ISA.
On the face of it, you might think it’s a higher rate, so you’ll get a better return – but take into account the tax you would have to pay and that interest rate drops to 3.6%, giving you a £288 return. 
Add those together, and your interest has dropped by £55 to £801.60. 
For a higher-rate taxpayer in the same situation, the change is more drastic. 
They would still earn the £513.60 in their cash ISA, but the interest rate on their one-year bond would effectively drop to 2.7% after the tax deduction, giving them £216 in interest. 
In total, across both accounts, they would have earned £729.60, instead of £856. 
“It’s not just people with loads of money that this will affect. A basic rate taxpayer will breach the personal savings allowance with just £22,223 in the top one-year bond paying 4.5%,” Anna Bowes, saving expert at The Private Office, said. 
What is Reeves trying to do? 
Reeves is hoping that lowering the cap will push people to put their savings into a stocks and shares ISA instead, but cash ISAs are significantly more popular. 
Around 14.4 million people have a cash ISA, according to figures from AJ Bell, while 4.2million hold a stocks and shares ISA. 
Before the budget Tom Selby, director of public policy at AJ Bell, warned: “Tinkering with the cash ISA allowance would be an ineffective way to promote investing, with more than half of Brits saying that, if faced with a cash ISA cut, they would simply move their money to a different savings account. 
“It would also add significant further complexity to the system when Labour said before the general election they were committed to simplification.” 
Banks and building societies, which use money in cash ISAs to lend to customers, warned the cut could cause mortgage rates to rise. 
The important things to remember 
One of the real risks of the cut is the psychological impact it will have on savers, with several experts warning that people may withdraw their cash even if it’s nowhere near the £12,000 simply through lack of understanding. 
“On one hand, slashing the cash ISA allowance from £20,000 to £12,000 will not have a dramatic effect on most people,” Adam French, head of news at Moneyfacts, said.
“The average amount saved into a cash ISA in the 2023/24 tax year was just under £7,000 per person. However, cultural and behavioural barriers to investing run much deeper than the limit on what can be saved into a cash ISA.” 
Selby warned that it could create a “scarcity mindset”, resulting in savers taking a “use it or lose it approach” towards contributions. 
The plus side is the new limit is unlikely to affect money already stashed away in your cash ISA. 
MoneySavingExpert Martin Lewis said the limits usually only applied to new money being put in – but we should get more confirmation of this in due course. 
Drivers will pay more fuel duty from next September, according to the leaked Office for Budget Responsibility document.
Rachel Reeves will extend the 5p per litre cut for another year, before it is “reversed through a staggered approach”, it says.
The tax has been held at 57.95p since 2011, but the effective rate paid by drivers since 2022 has been 52.95p as a result of a “temporary” 5p cut introduced by the Conservatives and extended by Labour.
From April 2027, fuel duty rates will increase annually by the RPI measure of inflation, the document said. 
This would be the first rise in 16 years.
After facing immense pressure from Labour MPs and campaigners, Rachel Reeves has decided to scrap the two-child benefit cap. 
Getting rid of the cap means eligible parents will be able to claim the child-related element of universal credit for all their children from April 2026. 
This means you will be able to claim £292.18 a month for any child born after 6 April 2017. 
If your first child was born before that date, the universal credit you can claim is worth £339 a month. 
With the cap lifted, an eligible family with three children, all born after April 2017, should get £876.54 a month.
In a year, they would get around £3,500 for each child. 
What impact could lifting the cap have? 
Earlier this year, Child Poverty Action Group found 109 children were pulled into poverty each day by the cap, adding to the 4.8 million already in poverty. 
Estimates suggested that scrapping the cap could lift 350,000 children out of poverty and reduce the depth of poverty for a further 800,000 children.
A household is considered in relative poverty if it earns below 60% of the median income after housing costs.
How much is it going to cost? 
The Office for Budget Responsibility says the removal of the cap will cost £2.3bn in 2026-27 and £3bn in 2029-30. 
“This includes £300m by 2029-30 for the cost of an estimated 25,000 additional entitled families making a universal credit claim as a result of the increase in benefit generosity,” it adds. 
By James Sillars, business and economics reporter
It’s fair to say financial market sentiment towards the budget has turned – and not in a way Rachel Reeves would like to see.
We saw a brief jump in the pound and fall in bond yields – the interest rate demanded by investors to hold UK government bonds.
It was an early reaction to details of the budget released in error by the Office for Budget Responsibility (OBR).
We now have the pound down on the day against both the dollar and euro.
Crucially for the chancellor, those bond yields are also creeping up too.
A decline of five basis points on a 30-year bond has now been replaced by an increase of five basis points.
That was despite the OBR’s conclusions around the economy and public finances coming in more upbeat than had perhaps been expected.
It may be there are worries among investors over the effects this tax-raising budget will have on the economy.
The market reaction will continue to play out as this extraordinary day goes on.
The Money team is assessing what the leaks from the Office for Budget Responsibility mean for you.
The big picture emerging from the accidentally published document appears to be summed up in point 3.16, reading:
“Real household disposable income is lowered in [the] medium term by the rise in personal tax rises announced in this budget, which decreases household consumption significantly.”
The information comes from an OBR forecast based on announcements yet to be made by the chancellor.
Economics and data editor Ed Conway adds: “The big picture here is lots more taxes.”
“The tax burden is heading up much higher” than was anticipated based on the Labour manifesto, he says.
It could be the highest ever tax burden, Conway adds.
Keir Starmer had told political editor Beth Rigby that taxes on working people were too high in the run-up to the election.
National insurance will be charged on salary-sacrificed pension contributions above an annual £2,000 threshold from April 2029, raising £4.7bn, the Office for Budget Responsibility said.
What is salary sacrifice? 
Salary sacrifice schemes allow people to give up a chunk of their salary for a different benefit from their employer.
This could be for a company car, a cycle to work programme, childcare vouchers, healthcare or a pension. 
When you give up some of your salary, you do not pay income tax or national insurance on that amount, as it’s taken out of your gross salary before the taxes are calculated. 
This can help bring your overall tax bill down and boost your take-home pay. 
It’s helpful for your employer as well, as they don’t have to pay national insurance on the amount you sacrifice either. 
Some employers choose to add this saving to your pension as well. 
Income tax
The chancellor has frozen income tax thresholds for an additional three years, despite saying last year that to do so would “hurt working people”.
The Office for Budget Responsibility’s report on the chancellor’s budget has been released online earlier than planned. 
In it, the OBR analyses policies taken by Rachel Reeves. 
In the lengthy document, it says: “A set of personal tax changes which increase receipts by £14.9 billion in 2029-30, including: freezing personal tax and employer national insurance contributions (NICs) thresholds for three years from 2028-29, which raises £8bn.”
The report would normally only be released after the chancellor has finished outlining all the measures of the budget in front of MPs in the House of Commons.
But the full document is already available to read online now.
Two-child benefit cap
The two-child benefit cap will be scrapped in the budget, and this change will come into effect in April.
The cap is a measure that limits the amount of benefits larger families can receive, but charities have called for its removal and it is said doing so will lift millions of children out of poverty.
The report states: “The limit restricted the UC child element, which is currently £3,500 per year for second and subsequent children, to two children per family apart from children born prior to 6 April 2017 and those who meet certain exemption criteria. 
“Its removal costs £2.3bn in 2026- 27 and £3bn in 2029-30.
“This includes £300 million by 2029-30 for the cost of an estimated 25,000 additional entitled families making a UC claim as a result of the increase in benefit generosity.”
Mansion tax on properties worth £2m
The chancellor is introducing a mansion tax in the budget, the OBR has confirmed. 
Reeves will introduce a high value council tax surcharge on properties worth more than £2m.
This will raise £0.4bn, the OBR has confirmed.
Here in Money we’ll focus on what it means for you – with a Q&A at 4.30pm featuring a panel of consumer experts and our own Money reporter Jess Sharp.
Submit your question above.
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