The Autumn Budget 2025 delivered a complex set of measures that will reshape the UK’s financial and tax landscape for years.
While no headline income tax rates were raised, the Chancellor introduced significant changes through tax freezes (now until 2031) and targeted rate increases on investment income.
As always my summary cuts through the complexity, detailing essential takeaways for individuals, landlords, businesses, and shareholders, covering everything from a reduced Cash ISA limit and higher dividend tax to new Council Tax surcharges and changes to capital allowances.
Individuals
- Tax on property income to increase by 2% from April 2027 to 22%, 42% and 47%
- Tax on savings income to increase by 2% from April 2027 to 22%, 42% and 47%
- Tax on dividend income to increase by 2% from April 2026 to 10.75% and 35.75% with the additional rate unchanged at 39.35%
- Personal allowance remains frozen at £12,570 for an additional three years until April 3031
- Higher rate threshold remains frozen at £50,270 for an additional three years until April 2031
- National insurance savings on salary sacrifice for pension contributions restricted to £2,000 from April 2029
- Government looking into ways to enable pensioners to not have to pay small amounts of tax when their state pension exceeds the personal allowance from April 2027.
- The annual cash ISA limit to be reduced to £12,000 from April 2027 for those under 65 while the overall ISA limit remains at £20,000
- Minimum wage increase to £12.71 per hour from April 2026 for those aged 21 and over
- Minimum wage increase to £10.85 per hour from April 2026 for those aged 18 to 20
- Minimum wage increase to £8.00 per hour from April 2026 for apprentices and those aged 16 to 17
- VCT income tax relief to fall from 30% to 20% from April 2026
Businesses & self-employed
- Employer’s NIC threshold fixed at £5,000 until April 2031
- Penalties for late submission of Making Tax Digital for Income Tax quarterly updates not to be introduced until April 2027
- Government to require self-assessment taxpayers to pay more tax through PAYE from April 2029
- Penalties for late submission of corporation returns to be doubled from April 2026
- Main rate of capital allowances to reduce from 18% to 14% from April 2026
- New first year allowance of 40% from April 2026 to be available for assets used for leasing
- Government to require all VAT invoices to be issued in a specified electronic format from April 2029
- No changes to VAT rates or thresholds
Inheritance tax
- No changes to main Inheritance Tax thresholds or rates until 2031
- The £1 million agricultural and business property nil-rate bands will be transferrable between spouses and civil partners including when the first death was before April 2026
Companies & shareholders
- Tax on dividend income to increase by 2% from April 2026 to 10.75% and 35.75% with the additional rate unchanged at 39.35%
- The tax-free dividend threshold remains at £500
- Main rate of capital allowances to reduce from 18% to 14% from April 2026
- New first year allowance of 40% from April 2026 to be available for assets used for leasing
- No changes to Corporation tax rates and thresholds: rates remain at 19% and 25%
- Government to explore new requirements for reporting transactions between close-companies and their shareholders to HMRC
Property
- Tax on property income to increase by 2% from April 2027 to 22%, 42% and 47%
- High Value Council Tax Surcharge for residential properties worth £2 million from April 2028 (England only) with charges between £2,500 and £7,500 per year
Other announcements
- Tax advisers will have to register with HMRC from 1 April 2026 and meet minimum standards
- Minimum wage increase to £12.71 per hour from April 2026 for those aged 21 and over
- Minimum wage increase to £10.85 per hour from April 2026 for those aged 18 to 20
- Minimum wage increase to £8.00 per hour from April 2026 for apprentices and those aged 16 to 17
- Removal of access to voluntary class 2 NICs for non-residents
- Introduction of pay-per-mile tax to be introduced for electric and hybrid vehicles from April 2028
- Two-child limit in the Universal Credit Child Element to be removed from April 2026
- Fuel duty to remain frozen
- NHS Prescription charges to remain at £9.90 for 2026/27
- Winter fuel allowance threshold to remain at £35,000 for the length of the parliament
The good news? Rumours of VAT rate hikes and a lower registration threshold were thankfully just rumours!
If you are concerned over how any of these announcements may affect you or your business please do not hesitate to get in touch (link to kathryn@greenwoodtax.co.uk) and I’ll be happy to discuss how you tax position may be affected.
