Autumn Budget 2025

Income Tax Threshold Freeze Extended to 2031

One of the biggest revenue-raisers in the Budget, this will push more people into higher tax bands.

Thresholds remain frozen for three more years.

Keeping the income tax personal allowance, the higher-rate threshold and additional-rate thresholds at their current levels of £12,570, £50,270 and £125,140, respectively.

Higher Taxes on Savings, Rental Income (April 2027) & Dividends (April 2026)

The Budget brings significant tax increases for anyone earning dividend income or interest on savings.

This affects limited company directors, landlords, investors and anyone with savings outside ISAs.

Savings and rental income tax rates increase by 2 percentage points from April 2027.

Dividend Tax Increases (from April 2026)

Dividend tax will rise by 2 percentage points across the main rates:

National Minimum Wage Increase

Minimum wage increases from £12.21 → £12.71 (a 4.1% rise) from April 2026 for those aged 21+.

A win for employees, but it will increase employer staffing costs.

National Insurance Changes for UK Citizens Living Abroad

Access to pay voluntary Class 2 NICs abroad will be removed, and the initial residency/contributions requirement to pay voluntary NICs outside the UK will be increased to 10 years.

Pension Contributions: Key Change

From April 2029, a major change to pension contributions will take effect. Employer pension contributions made through salary sacrifice will become subject to National Insurance (NICs) on amounts above £2,000 per year.

• This effectively removes a key tax advantage that many employees have used to reduce their NI bills by sacrificing part of their salary into pension.
• Normal employer pension contributions (not made via salary sacrifice) remain fully tax-efficient, so employers may wish to review their pension arrangements to ensure staff continue to benefit from the most efficient structure.

ISA System Reformed

The full £20k ISA limit still applies, but the cash element is now restricted.

• Up to £12,000 can be used for a Cash ISA, with £8,000 allowable for investments.
• Over-65s can still use the full £20,000 Cash ISA allowance.

£2,500 Annual Charge for Properties Over £2m

High-value property owners will face an additional £2,500 levy, paid alongside council tax.

Aimed at wealthier homeowners and property investors.

Pro-Business Investment Measures

The Chancellor doubled down on entrepreneur support:

• Enterprise incentives refreshed
• UK listings relief extended to 3 years to encourage London flotations
• 40% First-Year Allowance on qualifying investment (previously lower)
• Strong messaging: “If you build here, Britain will back you.”

Business Rates / Property-Related Tax Reform Direction

While not fully legislated, the Budget signalled new scrutiny on property-based taxation — particularly impacting:

• Landlords
• High-value property holders
• Businesses with premium premises

This aligns with the new £2,500 levy and signals further reform ahead.

Corporation Tax: Key Capital Allowance Changes Coming in 2026

Although Corporation Tax rates are staying the same, the government has announced two important changes to capital allowances that will affect how businesses claim tax relief on equipment and machinery from April 2026.

Writing-Down Allowances are being reduced (18% → 14%)
Writing-Down Allowances (WDA) are used when a business can’t claim full tax relief on an asset in the year it’s bought. Instead, the cost is written off gradually over time. From 1 April 2026, the main rate of WDA will fall from 18% to 14%.

New 40% First-Year Allowance
A brand-new 40% First-Year Allowance (FYA) is being introduced for new assets that don’t qualify for full expensing.

HMRC Increased Focus on Compliance and Debt Collection

Businesses can expect more enquiries, tighter scrutiny of claims, and quicker action on overdue tax.

This includes greater use of digital tools to identify discrepancies and more proactive follow-up on unpaid liabilities.

Companies should ensure their filings are accurate and up to date, and be prepared for a more assertive approach from HMRC in recovering outstanding debts.

Other Announcements

• EV mileage-based charge introduced from 2028.
• Tightening of EOT-related reliefs: 100% CGT relief reduced to 50% with immediate effect.
• E-invoicing for VAT invoices from 2029.
• Customs duty will apply on parcels of any value imported into the UK.