After last year’s budget, which saw businesses foot the bill while individuals prospered,’ 2025’s update from the Chancellor was much anticipated. This year’s more balanced approach has once again focused on taxes, but those that affect individual and household income as much as businesses. And in an unexpected twist, the OBR helpfully published its assessment a good half-hour early, giving everyone a sneak preview before the Chancellor had even reached the dispatch box.
Here’s everything you need to know about this year’s budget, with insight from our team as to how it affects you and/or your business.
Key headlines from the Autumn Budget 2025
- An additional 2% tax on savings, rental and dividend income, effective from April 2027.
- Personal Income Tax thresholds and employer National Insurance Contributions frozen for a further three years from 2028-29
- Salary Sacrifice Pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance.
- National Minimum Wage and Living Wage are increased once again, effective from April 2026.
- A new ‘Mansion Tax’ will be charged on an annual basis, payable alongside your Council Tax, for properties valued at £2m+.
Changes affecting businesses
Reduction of the Writing Down Allowance main rate
Whilst the main rate of Corporation Tax was left frozen at 25%, the Chancellor has reduced the Writing Down Allowance main rate from 18% to 14% with effect from April 2026. The WDA main rate provides sole traders, partnerships and incorporated companies with tax relief for capital expenditure that doesn’t qualify for Annual Investment Allowances or full expensing relief.
National Minimum Wage and Living Wage increases
Once again, the cost of employment is set to rise with a substantial increase to the Minimum and Living wages. The minimum wage for 18 to 20 will rise from £10 to £10.85 (a staggering 8.5%), while the living wage will go up from £12.21 to £12.71. Taking effect from April 2026, there is time to plan – but if you’re a sizeable employer, this may need due consideration to ensure you’re prepared for the additional costs.
Electric vehicle tax
Whilst also affecting individuals, businesses with electric vehicle fleets will also have to take note of new taxes affecting electric vehicles at a rate of 3p per mile for electric cars, and 1.5p per mile for plug-in hybrids. It’s not a popular measure, but one that is deemed necessary to invest more into the necessary infrastructure as EV adoption increases in the future.
CGT on share disposals to Employee Ownership Trust
Effective immediately, Capital Gains Tax relief will be reduced on company disposals to Employee Ownership Trusts, from 100% to 50%. For those with a business to sell who were considering EOT, it’s still a viable option with a high level of CGT relief to benefit from. Although the incentive is no longer as great, which should lead you to reevaluate your options.
Changes affecting individuals
Tax on rental, savings and dividend income will increase by 2% from April 2027, in line with the Chancellor’s aim to level the playing field across different income sources. This means the basic, higher, and additional rates will rise to 22%, 42% and 47% respectively.
This affects Landlords who are operating their rentals outside of the structure of a limited company, and business owners who operate through a Limited Company and structure their income using dividends. If this applies to you, it’s worth paying consideration to how your business is structured and whether there’s a more tax-efficient way to operate.
Income Tax thresholds frozen
Freezing tax thresholds on personal tax and employer National Insurance contributions thresholds for three years from 2028-29 is set to raise the government a staggering £8bn, bringing more people into higher tax bands over the affected period. Whilst no changes have been made to the tax bands, meaning the Labour government can technically keep to its manifesto pledge of not raising taxes for working people, those same people will be paying more tax over the period when earnings rise.
Salary Sacrifice Pension contributions
From 2029, salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance, with liable sums taxed like any other pension contribution. If you’re a higher earner using salary-sacrifice pensions to minimise your tax liability, there might now be more tax-efficient ways to invest – it’s certainly worth a conversation with your accountant or IFA.
ISA reforms
In a similar vein, the Chancellor has reduced the ISA cash limit from £20k to £12k, effective from 6 April 2027. There are, however, a few exceptions. The new rule isn’t applicable to those older than 65 (likely a giveaway to win back the goodwill of pensioners after the Winter Fuel Payment debacle), and there will apparently be a consultation on something to replace the Help to Buy ISA. Savers will also still be allowed to invest £20,000 into a Stocks and Shares ISA – a detail which will soften the blow for many.
Property taxes
The newly coined ‘Mansion Tax’ will bring a high-value surcharge, paid alongside your council tax each year, for properties worth more than £2m. For properties valued between £2m and £5m, this will be £2,500 per year, and for properties valued at £5m+ it will be £7,500 per year.
This will come into effect from April 2028, but obviously will have an impact on the property market around the qualifying value of £2m. Valuations will be completed by an independent office and will be reflective of properties’ values in 2026, as opposed to any historic valuations.
IHT changes
The Government has finally bowed to pressure and announced, as part of the Autumn Budget, that the new £1m allowance for 100% IHT relief on qualifying Agricultural and Business Property Relief assets would be transferable between spouses, effective from 6 April 2026.
This is welcome news – but might require action. Many people have restructured and made changes to ownership in the last 12 months, so it might be worthwhile seeking advice to check that your current structure is the most tax-efficient.
Tara Aldwin, Director at Foxley Kingham commented:
“This budget has substantially increased the Government’s tax take, with it set to reach an all-time high. But unlike last year’s budget, which seemed to hit businesses disproportionately, this is also hitting individuals. The extra tax on savings, rental and dividend income will detrimentally impact many small business owners and landlords, alongside the extended freezing of tax and NI thresholds, which will not have risen at all over a 10 year period between 2021 and 2031.”
For businesses, it’s the increased cost of employment that continues to put pressure on bottom lines, but the Government has announced (with the promise of more detail to follow) that there will be rate reliefs and support packages available for certain industries and within certain regions. The way these changes have been structured means that we’re in an increasingly complex landscape so it’s doubly as important to have an open conversation about the future with your finance team.
There is also no doubt of the additional tax burden that now falls on business owners and individuals, and as a result, it will be prudent for anyone affected to look at how their savings and investments are structured. This is especially true for those who have rental properties or businesses they will eventually want to exit.
As we learned with the Autumn Budget 2024, there is a lot of change, but there’s also a lot of detail for the future, which will allow us to plan effectively.”
If you need support with planning for your personal or business finances, fill out our contact form to arrange a confidential consultation from Foxley Kingham’s expert team.
You can also download the full Autumn Budget 2025 report here.