Autumn Budget 2025 – Key Measures for Individuals and Businesses
The Chancellor’s Autumn Budget 2025 has introduced a wide range of measures that will affect both personal taxpayers and the business community. Below we outline the main announcements most relevant to our clients.
Personal Tax Changes
Income Tax and National Insurance
- Personal allowance (£12,570) and higher-rate threshold (£50,271) frozen until April 2031.
- No changes to headline tax rates, but more taxpayers will move into higher bands due to the freeze.
Pensions
- From April 2029, only the first £2,000 of salary-sacrificed pension contributions will be exempt from National Insurance.
- Contributions above this will attract NIC, reducing efficiency for higher savers.
Property and Wealth Taxes
- Annual charge from 2028 on properties valued over £2m:
- £2,500 for homes valued £2–5m
- £7,500 for homes above £5m.
- New property income tax rates from April 2027:
- 22% (basic rate), 42% (higher rate), 47% (additional rate).
Savings and Dividends
- Dividend tax rates rise from April 2026:
- Basic rate: 10.75%
- Higher rate: 35.75%.
- Savings income tax increases by 2 percentage points from April 2027.
- Cash ISA allowance reduced to £12,000 (under-65s) from April 2027. Stocks & Shares ISA allowance remains £20,000.
Families and Retirees
- Two-child benefit cap removed from April 2026.
- State Pension uplift of 4.8% from April 2026, worth approximately £575 per year.
Business Tax Changes
Corporation Tax
- Main rate remains at 25%.
- Small profits rate continues at 19% for companies with profits under £50,000.
- The marginal rate on profits between £50,000 and £250,000 is 26.5%.
Business Investment
- Full expensing for qualifying plant and machinery expenditure made permanent.
- Annual Investment Allowance maintained at £1m.
- Enhanced reliefs for green technology and energy-efficient equipment introduced from April 2026.
Capital Gain Tax
- After a number of changes in the October 2024 budget there were no changes to the headline rates & allowances.
- There was announced a reduction in the 100% relief (reduced to 50%) on disposal of share to Employment Ownership Trusts, effective from yesterday.
- Let us know if you would like further detail on the 2024 changes or the EOT changes.
Employers and Payroll
- Employer National Insurance contributions rise by 0.5 percentage points from April 2026.
- Salary sacrifice for pensions restricted from April 2029 (only first £2,000 exempt from NIC).
- National Minimum and Living Wage increases to £12.71/hour for workers aged 21+ from April 2026.
Property and Business Rates
- Small Business Rate Relief threshold increased to £25,000 rateable value.
- Revaluation cycle shortened to every 2 years from 2027.
- Annual property surcharge introduced for commercial premises valued over £5m from 2028.
VAT and Indirect Taxes
- VAT registration threshold frozen at £90,000 until 2028.
- Fuel duty cut extended until September 2026, then phased out.
- New carbon levy on high-emission industries from April 2027.
Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS)
- From April 2026, the VCT and EIS annual investment limit will increase to £10 million. The lifetime limit will increase to £24 million. The gross assets test will increase to £30 million before share issue and £35 million after. However, the upfront VCT income tax relief will reduce from 30% to 20%
ISA reform
- Overall ISA subscription limits will remain at £20,000 until 2020/31. However, from 6 April 2027, the subscription limit for cash ISAs will be limited to £12,000 for those under the age of 65.
Electric Vehicle Excise Duty (eVED):
- Drivers will pay a per-mile charge alongside existing Vehicle Excise Duty, with effect from April 2028. Electric cars will pay 3p per mile, while plug-in hybrids will pay 1.5p per mile.
Support for SMEs
- Expansion of government-backed loan schemes for small and medium-sized enterprises.
- Increased funding for apprenticeships and skills training.
- Digital adoption grants available from 2026 to support investment in AI and automation.
What This Means
- Individuals should review pension contributions, property exposure and savings strategies in light of higher tax burdens and reduced allowances. Families and retirees will benefit from expanded support.
- Businesses should plan for higher payroll costs, property charges and employer NIC, while taking advantage of permanent full expensing, green reliefs and SME support schemes.
Contact Us
If you would like to discuss how these measures affect your personal circumstances or your business, please contact us for tailored advice.
