Autumn Budget 2025 Breakdown

After a lot of uncertainty and a lot of ‘leaks’, we have finally heard what Rachel Reeves has to say in the 2025 budget. Unfortunately, it’s not great news, especially for the working people and small business owners. But, this is not just bad news, read to the end of the article for the brighter announcements.

Income tax & NI thresholds frozen again for a further 3 years

This is a ‘stealthy’ one - the personal income tax and equivalent national insurance thresholds are being maintained at current levels for a further 3 years until April 2031. This will push more individuals into the tax net or to higher rates.

Higher rates of income tax for property income

From 6th April 2027 a 2% increase creates separate tax rates for property income. Basic rate is 22%, higher rate is 42%, and for the additional rate: 47%.

Higher rates of income tax for savings income

The same as the property income, as of 6th April 2027 there will be a 2 % increase for savings income, creating a separate tax rate. Basic rate is 22%, higher rate is 42%, and for the additional rate: 47%.

Higher rates of income tax on dividends

Another 2% increase to create separate tax rates for dividend income. From 6th April 2026 the basic rate will be 10.75% and the higher rate will be 35.75% (no increase to the additional rate).

Cap on salary sacrifice

From April 2029, the value of salary sacrificed pension contributions that can receive employee and employer NICs relief will be restricted to £2,000 per year.

Capital Allowances reduction

Reducing the main rate writing down allowance from 18% to 14% from April 2026 to reduce the tax relief on expenditure on plant and machinery.

Tax relief on working from home expenses

Disallowing a deduction from earnings for additional household expenses incurred in employment duties, where those expenses are not reimbursed by the employer.

High-value property surcharge

A ‘mansion tax’ on properties valued over £2 million of £2,500 per annum from April 2028 (increasing to £7,500 for properties valued over £5 million).

Inheritance tax thresholds frozen until 2031

They are maintaining the nil-rate band, residence nil-rate band, and allowance for 100% rate of agricultural property relief and business property relief until April 2031.

New EV road-use tax

From April 2028 a new mileage charge for fully electric and plug-in hybrid cars will be introduced.

Reduction in cash ISA savings limit

They are maintaining the total ISA annual subscription limit at £20,000 with a cash limit reduced to £12,000 from April 2027.

Minimum wage increases

From April 2026 the NMW will increase to £12.71.

Brighter Announcements:

Transferrable APR/BPR 100% relief

From 6th April 2026 they will allow any unused allowance for the 100% rate of relief to be transferable between spouses and civil partners.

Business rates cut for retail, hospitality and leisure

From 1st April 2026 there will be two new lower multipliers for eligible retail, hospitality and leisure properties funded by a new high-value multiplier.

Fuel duty freeze

Extending the temporary 5p fuel duty cut for a further five months until the end of August 2026.

If you need further information or support regarding the budget, please get in touch.