Autumn 2025 Budget Highlights

The first female Chancellor has delivered the 2025 Autumn Budget, putting an end to intense speculation and rumours.  In the aftermath, there is a great deal of detail to unpack and understand, but it is widely considered that the measures were less drastic than anticipated. 

Despite speculation, we saw no changes to stamp duty or capital gains tax in respect of property sales or purchases, no changes to the annual allowance for pensions or the 25% tax free pension lump sum.  There were also no changes announced in respect of gifting for inheritance tax purposes, or the VAT threshold. There was also no mention of plans for the introduction of employer national insurance contributions (NICs) on limited liability partnership (LLP) members.

As trusted advisors since 1958, our experienced team can help you assess what the measures could mean for you, your family, and your business, enabling you to confidently make the decisions necessary to manage your affairs tax efficiently and plan effectively for the future, despite our ever-changing landscape.   

Below, we highlight some of the key announcements for both individuals and businesses. 

Individuals 

• The freezing of income tax and employer national insurance contributions (NICs) thresholds will continue at their current levels until 2030.

• From 2027, pensioners whose only income is the basic or new State Pension will not be expected to pay small amounts of tax via HMRC’s “simple assessment” process.

• The basic rate, higher rate and additional rates of income tax on property and savings income will increase by 2 percentage points with effect from April 2027, increasing them to 22%, 42% and 47% respectively.

• From April 2026, income tax rates on dividend income will rise by 2 percentage points for the basic and higher rates, increasing them to 10.75% and 35.75% respectively.

• From April 2026, non-UK tax residents will no longer be able to pay voluntary class 2 NICs to preserve or accrue state pension entitlement.  The more costly class 3 voluntary NICs will remain available.

• From April 2029, only the first £2,000 per year of salary-sacrificed pension contributions will remain exempt from national insurance.

• It was announced that inheritance tax thresholds remain frozen until 2030, with the nil-rate band and residence nil-rate band remaining unchanged until then.

• From April 2026 any unused £1m allowance for the 100% rate of agricultural property relief (APR) and business property relief (BPR) will be transferable between spouses and civil partners, including if the first death is before 6 April 2026.

• A high-value council tax surcharge, labelled a “Mansion Tax,” will be introduced from 2028, charging £2,500 and £7,500 annually for properties worth more than £2 million and £5 million respectively.

• From April 2028, a new excise duty on electric cars will be introduced, payable alongside vehicle excise duty, at a rate of 3p per mile for electric cars and 1.5p per mile for plug-in hybrids.  However, the threshold at which the expensive car supplement (ECS) becomes payable on electric cars rises to £50,000 from April 2026. 

• From April 2027, the cash ISA allowance for those under 65 will fall to £12,000.  The overall ISA limit stays at £20,000, so savers can still invest the remaining £8,000 into other ISAs, such as stocks and shares. Those aged 65+ will keep the full £20,000 allowance to use across any ISA types.

• In a bid to collect tax faster, the Government will publish a consultation in early 2026 on how taxpayers with PAYE income can pay more of their self-assessment liabilities in-year via PAYE from 2029.

• The two-child benefit cap (which restricted universal credit and child tax credit to the first two children in most households) will be abolished from April 2026.

• A new Youth Guarantee has been announced, offering 18 to 24-year-olds on universal credit for 18 months a work placement with the DWP.

• Changes to gambling duties have been announced, primarily targeting online gambling.

• The 2025 UK Budget confirms that digital IDs will become mandatory for right-to-work checks by 2029, integrated with the GOV.UK One Login system under the Data (Use and Access) Act. 

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Businesses 

• The main rate of corporation tax remains at 25%.

• The writing-down allowance main rate will be reduced from 18% to 14% from April 2026.  A new 40% first-year allowance will be introduced from January 2026.  There will be no changes to the full-expensing regime.

• From April 2026, the use of umbrella companies by parties within the supply chain – including end users in some cases – will result in all such parties being liable for any PAYE failures by the umbrella company.

• From April 2026, in line with the increase in income tax rates on dividend income, the rate of s455 tax charged on loans to participators of close companies will increase to 35.75%.

• The Government will publish a consultation in early 2026 to explore introducing new requirements to report transactions between close companies and their shareholders to HMRC.

• From April 2029 businesses will be required to issue all VAT invoices as ‘e-invoices’.

• Capital gains tax relief for employee ownership trusts (EOTs) will be reduced from 100% to 50%.

• From April 2026 income tax relief on venture capital trust (VCT) investments will be reduced from 30% to 20%.  However, the annual investment limit for enterprise investment scheme (EIS) and VCT investments for companies will increase to £10 million, and the lifetime investment limit for companies will increase to £24 million.  There will also be an increase in the gross asset test, enabling more companies to become eligible for the schemes.

• From April 2026 more companies will become eligible for the enterprise management incentive (EMI) scheme, with an increase in the qualifying thresholds announced.  The number of employees test will increase to 500, and the gross asset test will increase to £120m. 

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If you have any questions or would like to discuss any aspect of the Budget in greater detail, we would be delighted to hear from you. 

Our contact details can be found here.