Martin Lewis Breaks Down the 2025 Budget: The Key Takeaways for Your Wallet
Money Saving Expert founder Martin Lewis has dissected Chancellor Rachel Reeves' second Budget, identifying several crucial developments for household finances. Delivering his analysis on a special podcast, Lewis provided clarity on what the government's proposals truly mean for people's pockets, from savings and energy costs to consumer protection.
Savings and ISA Changes: A Silver Lining
One of the most scrutinised areas was the upcoming adjustment to cash ISAs, scheduled for 2027. Martin Lewis suggested that while changes are coming, the outcome isn't as bad as it could have been. The Treasury confirmed that from April 6, 2027, tax rates on savings income will increase by 2% across the basic, higher, and additional rates.
Furthermore, the government will maintain the Starting Rate for Savings limit at £5,000 from April 2026 to April 2031. Lewis issued a specific alert to savers with around £20,000, explaining in detail how these new thresholds will impact their returns. Chancellor Reeves also confirmed a two-percentage-point increase on tax rates for property, savings, and dividend income.
Energy Bills and Consumer Protection Wins
Looking at more immediate concerns, Lewis explored changes to energy bills set for April next year. This analysis follows Ofgem's recent energy price cap increase of 2% from October 1, which pushed the typical annual cost for a dual-fuel household paying by Direct Debit to £1,755.
Perhaps the most significant consumer 'win' highlighted by Lewis involves the telecoms sector. He raised concerns over what he described as an 'outrageous' move by O2, which increased bills by '40% more' than many customers' original agreements. This change is understood to have affected up to 15.6 million customers.
In response, Lewis revealed that the Chancellor was expected to send a formal letter to Ofcom expressing concerns about such telecom pricing practices. This letter has now been published on GOV.UK. In defence, an O2 spokesperson stated they had been "fully transparent," offering customers the right to exit without penalty and highlighting their £700 million annual network investment.
Benefits Overhaul and Child Poverty Focus
Beyond consumer issues, the Budget unveiled a substantial £15 billion benefits spending plan. A central pillar of this was the scrapping of the controversial two-child benefit cap. The move includes increased payments for those on Universal Credit, Personal Independence Payment (PIP), and child benefits.
Chancellor Reeves framed this policy, projected to cost £3 billion annually, as a direct strategy to lift hundreds of thousands of children out of poverty, marking a significant shift in the welfare landscape.
