Following weeks of speculation and leaks, the 2025 Autumn Budget has been announced against a backdrop of economic uncertainty and a record-high tax burden.
While income tax, NIC, and VAT remain largely unchanged, the chancellor targeted savings and investments. From 6 April 2027, tax rates on savings and property income will rise by two percentage points to 22%, 42% and 47% for basic, higher and additional rate bands. Dividend tax increases apply from 6 April 2026, giving rates of 10.75%, 35.75% and 39.35%. Personal thresholds remain frozen until April 2031, continuing fiscal drag.
Savings incentives were reduced, with the cash ISA allowance cut from £20,000 to £12,000 for those under 65 from 2027, while other ISA allowances remain unchanged.
Pensions were targeted again, but this time only for employees making contributions via salary sacrifice. From April 2029, only the first £2,000 of salary sacrifice pension contributions will be exempt from NIC, with excess contributions subject to both employer and employee NIC.
On property, the chancellor announced an annual high-value council tax surcharge applies from April 2028, with the rate starting at £2,500 for homes between £2.0m-2.5m, £3,500 for homes between £2.5m-3.5m, £5,000 for homes between £3.5m-5.0m and finally, £7,500 for those above £5m. This marks the chancellor’s first step toward wealth taxation.
For businesses, business rates multipliers will be reduced for retail, hospitality and leisure properties under £500,000, funded by higher rates on properties above that threshold. The chancellor also announced expansions to EIS, VCT and EMI schemes to support startups. Capital allowances are to be reformed from April 2026, with the main rate dropping from 18% to 14%, alongside a new 40% first-year allowance outside of AIA and full expensing reliefs.
Capital taxes saw limited changes. Relief on sales to Employee Ownership Trusts falls from 100% to 50% while, for inheritance tax, the reduced £1m agricultural and business property relief from the previous budget will now be transferable between spouses and civil partners.
Finally, to ensure their contribution to the wear and tear of our roads was recognised, the chancellor announced an “Electric Vehicle Excise Duty” of 3p per mile for electric vehicles and 1.5p per mile for hybrid vehicles, starting from April 2028.
For full details, see our Budget summary below.
The information in this article was correct at the date it was first published.
However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.
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