Autumn Budget 2025 – Key Announcements and Analysis
After months of rumours and media speculation, one of the most eagerly awaited Budgets in recent years quickly became chaotic with the OBR releasing its Budget report before it even started.
Ahead of announcing specific tax and spending measures, the Chancellor outlined several core priorities for the year ahead in Autumn Budget 2025, including:
- Economic growth, investment & jobs
- Supporting public services and living standards
- Fiscal responsibility, debt reduction & public-sector reform
- Industrial strategy & long-term growth sectors
With £26 billion of tax rises announced by 2029/30, many are describing it as a smorgasbord of tax rises. The Budget included many headline measures relating to employee ownership trusts, salary sacrifice, inheritance tax and property tax. Alongside these, announcements were made on dividend tax, shareholder tax and savings income, income tax and national insurance, ISA Reform and a new mansion tax.
Below, we summarise the key announcements from the Chancellor’s statement, alongside outlining what these changes could mean for businesses, investors and individuals.
Capital gains tax relief for Employee Ownership Trusts
The Chancellor announced that capital gains tax relief for qualifying disposals to Employee Ownership Trusts will be drastically reduced, taking effect from Budget Day (26.11.2025). This will reduce from 100% of the gain to 50%.
Minimum wages to increase again following Autumn Budget 2025
From 1 April 2026, the National Living Wage will increase again. This time by 4.1% to £12.71 per hour. At the same time, the National Minimum Wage for 18 to 20-year-olds will increase by 8.5% to £10.85 per hour and for 16 to 17-year-olds and apprentices by 6.0% to £8.00 per hour.
Tax relief for salary sacrifice to be capped at £2,000 per year (but only from 2029)
The government intends to charge employer and employee NICs on pension contributions above £2,000 per annum made via salary sacrifice. This will take effect from 6 April 2029.
Inheritance tax in Autumn Budget 2025
The chancellor made announcements covering Inheritance tax. The main areas included freezing the annual thresholds for a further year and changes to Agricultural Property Relief and Business Property Relief
Change to Business Property Relief and Agricultural Relief reforms
It was announced in the Budget that the £1 million allowance for the 100% rate of Agricultural Property Relief and Business Property Relief will be transferable between spouses and civil partners.
Any business owners who have not taken advice on this matter must do so as soon as possible. Drastic changes affecting inheritance tax will take effect from 2026.
Freeze on inheritance tax thresholds for a further year
The inheritance tax nil-rate bands will now stay fixed for a further year until April 2031. The forthcoming combined allowance for the 100% rate of agricultural property relief and business property relief will also be fixed at £1 million for a further year, until 5 April 2031.
Stamp Duty – UK Listing Relief
Effective from 27 November 2025, transfers of a company’s securities will be subject to relief from the 0.5% Stamp Duty Reserve Tax charge for three years from the point the company lists on a UK-regulated market
EMI company eligibility expansion announced in Autumn Budget 2025
The Chancellor announced that, from April 2026, the government will increase the employee limit to 500, the gross assets test to £120 million and the company share option limit to £6 million.
The maximum holding period will increase to 15 years (including existing EMI contracts). The EMI notification requirement will also be removed from April 2027.
Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS)
The Chancellor announced that the VCT and EIS company investment limit will be increased to £10 million, with an increase of £20 million for Knowledge Intensive Companies (KICs). It will also increase the lifetime company investment limit to £24 million and £40 million for KICs.
The gross assets test will increase to £30 million before share issue (and £35 million after), from April 2026.
At the same time, the VCT income tax relief is to decrease to 20%
Capital allowances: Writing-Down Allowances
A new 40% First Year Allowance for main rate expenditure will be introduced. From 1 January 2026, this will include most expenditure on assets for leasing and expenditure by unincorporated businesses. Starting 1 April 2026 for Corporation Tax and 6 April for Income Tax, main rate writing-down allowances will reduce from 18% to 14%.
Property tax to increase following Autumn Budget 2025
From the 2027/28 tax year, the basic rate for property income will be 22%, with the higher rate being 42%. The property additional rate will be 47%.
Dividend tax, shareholder tax and savings income
Alongside property tax, the tax rates for dividend tax, shareholder tax and savings income all increased:
Dividend tax and shareholder tax to increase
The rates of income tax applicable to dividends is increasing. From the 2026/27 tax year, the ordinary rate will increase by 2 points to 10.75%. At the same time, the upper rate will be increased by 2 points to 35.75%. The additional rate will remain unchanged at 39.35%.
Changes to tax on savings income announced in Autumn Budget 2025
From the 2027/28 tax year, the savings basic rate will increase by 2 points to 22%, the higher rate will increase by 2 points to 42%, and the additional rate will increase by 2 points to 47%.
Income tax and National Insurance in Autumn Budget 2025
As predicted Income tax and National Insurance Thresholds were frozen yet again for further years.
Freeze on income tax thresholds extended for a further three years
The income tax personal allowance of £12,570 and the higher rate threshold of £50,270 will now be frozen for a further three years from April 2028 to April 2031.
The additional rate threshold will remain at £125,140 for the same period. As mentioned, an additional rate will apply from April 2026 for non-savings, dividend and property income.
National insurance thresholds frozen
Employee, employer and self-employed National Insurance thresholds are also being frozen for a further three years until 2031.
ISA Reform
As widely discussed in the media, from 6 April 2027, the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.
Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031.
Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year.
Mansion Tax
As widely speculated, the Chancellor announced a mansion tax in the form of a High Value Council Tax Surcharge (HVCTS). A surcharge of between £2,500 and £7,500 for homes above £2 million was suggested.
High Value Council tax surcharge
The Chancellor explained that a new charge on owners of residential property in England worth £2 million or more will come into effect from 2028/29. Further details will be set out at the next spending review with a consultation in the new year.
Will there be a Council tax revaluation following the Autumn Budget 2025 announcements?
It seems peculiar that only those properties over £2m will be identified. Current council tax rates are based on 1991 valuations (for England), which are now drastically out of date. If this valuation date is used, it will be over 30 years out of date. Conversely, if a new valuation date is used, there will be an unaligned two-tier system. What seems more logical is a full revaluation to enable this.
Electrical Vehicle tax and Fuel Duty
From April 2028, the government is introducing Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars. Drivers will pay for their mileage alongside their existing VED. A consultation has been published on its intended use and is seeking views on its implementation
From 1 April 2026, the threshold at which motorists with new EVs must pay the VED Expensive Car Supplement is increasing from £40,000 to £50,000
Changes to benefit-in-kind rules for Employee Car Ownership Schemes will be delayed until April 2030. Transitional arrangements will be put in place for those still in contract at this time, to provide additional support
Fuel Duty
The 5p fuel duty cut will be extended for a further five months, following which the cut will be reversed in three stages:
- 1p on 1 September 2026
- 2p on 1 December 2026
- 2p on 1 March 2027
It is intended that fuel duty rates will then increase by the Retail Prices Index (RPI) from April 2027.
Autumn Budget 2025 confirms two-child benefit cap to be scrapped
As predicted in the media, the Chancellor announced in the budget that the two-child benefit cap will be abolished from April 2026. The Institute for Fiscal Studies (IFS) estimates that the policy cap has saved the Treasury about £3.6bn a year.
What Actions Should You Be Taking Now following the Autumn Budget 2025?
With several of the Budget measures taking effect immediately or being phased in over the coming years, now is the right moment to review your financial planning and business structures:
- Reassess your income profile, particularly if you draw a significant proportion from dividends or property rental, as tax changes may alter the balance of tax-efficiency.
- Consider the impact of fiscal drag on PAYE arrangements, ensuring remuneration strategies remain aligned with personal and corporate tax efficiency.
- Plan ahead for higher electric vehicle costs, especially for businesses operating vehicle fleets that may face increased running and replacement expenses.
- Revisit tax and pension planning, ensuring portfolios are positioned to remain compliant and tax-efficient under the revised framework.
Contact Alexander & Co
If you need advice on any of the measures covered in this update, or support with wider tax or business matters, please contact Alexander & Co. You can complete the contact form on this page, or in the following ways:
Phone: 0161 832 4841 or 0207 1670 7220
Email: info@alexander.co.uk
Website: www.alexander.co.uk
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