What’s in the Autumn Budget 2025
Autumn Budget 2025
The chancellor presented her budget on 26th November. The content includes loads of small, complicated changes – however here are the main highlights: –
Personal Taxes
All tax bands are frozen for a further 3 years to 2031. Many more pensioners will therefore come into tax by 2028 as state pensions are increasing; the government is exploring new ways to collect this tax.
Income Tax on Dividends in the basic rate and higher rate tax bands is to increase by 2% from April 2026 – to 10.75% and 35.75% – the rate for additional rate tax payers is not changing at 39.35%.
Income Tax on property income is to increase by 2% from April 2027 in the rest of the UK – Scotland and Wales are able to choose their own, potentially different, rates.
The tax reducer for interest on property will also increase by 2% to 22%.
Income Tax on interest received is to increase by 2% from April 2027
From April 2027 there will also be an adjustment to dictate how to use personal allowances and loss relief, to make offset against investment income secondary to offset against other income, i.e. we can no longer choose.
A Council Tax surcharge to be levied on owners of higher value properties – £2,500pa on properties worth £2m to £2.5m up to £7,500pa on those worth over £5m, from April 2028.
There is to be a new pay per mile tax on electric cars – 3p per mile for all electric and 1.5p for hybrids.
Voluntary National Insurance, class 3 contributions, is to increase to £13.40 per week.
The new late return and late payment penalty regimes for MTD returns will apply to all self assessment returns from April 2027 and those penalties will increase from 2% and 4% to 3% and 10%.
Sole Traders
The small profits threshold, below which credits toward state pensions will not be earned, is increased to £7,105 pa from 6th April 2026, up from £6,875pa.
Class 2 national insurance contributions, payable to earn pension credits if sole trader income is less than the above, is increased to £3.65pw; and will no longer be available to those living overseas from April 2026,
MTD for Income Tax
MTD penalties for quarterly returns are deferred, none will be charged until 2027.
Company Taxes
No changes to rates or thresholds.
Late filing penalties doubled.
Capital Allowances
Electric cars and charge points 100% first year allowance is extended to April 2027
Writing down allowance for main pool assets is reduced from 18% to 14% from April 2026
New 40% first year allowance available for main pool assets including assets leased out in UK, but not cars or second-hand assets, from 1st January 2026
Employing staff
The minimum wage that must be paid in cash per hour of work, increases from the first payday after 1st April 2026. A new Fair Work Agency is to police this, charged with investigating every employee complaint so make sure you get it right.
Rates are as follows: –
| From April 2025 | From April 2026 | |
| National Living wage for those 21 and over | £12.21 | £12.71 |
| Minimum wage for 18–20-year-olds | £10.00 | £10.85 |
| Under 18 rate | £7.55 | £8.00 |
| Apprentice rate – for those under 19 or in first year of apprenticeship | £7.55 | £8.00 |
Employers NIC relief for veterans in first year of civilian employment to be extended to 2028 and then replaced/abolished.
Tax relief for home working expenses claims via your tax return or tax code is to be abolished from April 2026 – but employers can continue to reimburse such necessary and contractual expenses tax free, or the £6 per week allowance.
Benefits in Kind
The tax on loans to directors and participators, outstanding at the year end and not repaid within 9 months, is to increase to 35.75% from 6th April 2026.
Pension contributions paid tax and national insurance free under salary sacrifice arrangements are to be caped at £2,000pm from April 2029 – above that threshold both employer and employees national insurance will be due. There is no change to income tax rules.
Employee car ownership company car schemes are to be brought into benefit in kind rules.
There is to be a relaxation in the settlement agreements for Loan Charges in an attempt to clear the backlog of historic claims; backdated to 5th April 2019 when this rule was introduced.
VAT
No changes to rates or thresholds
Electronic invoicing is to become compulsory in 2029 for all business-to-business VAT invoices or business to Government. This is not pdf’s but data files.
Private Hire Taxis e.g. Uber will officially no longer be eligible to use the tour operators margin scheme form January 2026.
Currently small packages sent from abroad, under £135, are exempt from VAT and duty – this is to be abolished from March 2029.
Capital Gains Tax and Investment Tax Reliefs
Cash ISA allowance for under 65’s to be reduced to £12,000, from April 2027, with the remaining £8,000 ISA allowance for stock and shares ISA’s only.
There is a separate box on the tax return for crypto asset gains next year and from 2027 the crypto companies will be obliged to provide info to HMRC so they will know the figure to check it!
EIS and VCT schemes are to be expanded with new scale up phase options to become available to developing companies as well as the existing start up company options. However VCT relief is to be reduced from 30% to 20% from April 2026.
Employee ownership trusts – prior to budget day 100% of the gains could be deferred, this is reduced to 50% and such gains will not be eligible for Business Asset disposal relief. New increased limits will apply from April 2026.
Inheritance Tax
The new £1m allowance for agricultural property and business property from April 2026 is to be transferable to the surviving spouse like other IHT allowances.
