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The Autumn Budget 2025
Following the announcement of the Autumn 2025 Budget by Chancellor Rachel Reeves on Wednesday 26 November, understanding the impact is essential for individuals and businesses alike. Our team have highlighted the key announcements, written articles explaining how the changes will affect you in practical terms, and detailed the opportunities and challenges they present. Below, you will find clear, practical guidance designed to help you make informed decisions and plan confidently for the year ahead.
Our Autumn Budget Summary Bulletin
Wednesday 26 November saw Chancellor Rachel Reeves deliver her Autumn 2025 Budget. Whilst an error by the Office of Budget Responsibility saw some of the information released before the Budget started, there were a lot of announcements that will impact both individuals and businesses, and we are here to support you with forward planning and to make sure that you make informed decisions.
Find below a brief summary of the main announcements and when they are being introduced.
Changes from January 2026
- A new 40% First Year Allowance will be available for businesses that purchase assets which do not qualify for the current £1 million Annual Investment Allowance or for ‘full expensing’. This will give relief for assets purchased to lease and assets above £1 million bought by unincorporated businesses, but does not apply to the purchase of cars.
- A new Advance Clearance Service to provide certainty for some Research & Development (R&D) claims is to be introduced ‘in Spring 2026’ following consultation.
Changes from April 2026
- Income Tax thresholds and bands will be frozen (and continue to be frozen until April 2031).
- Income Tax rates on dividend income will rise from 8.75% to 10.75% (basic rate) and from 33.75% to 35.75% (higher rate); the additional rate remains 39.35%.
- The same 2% increase will apply to Corporation Tax payable on loans made to company directors which are not repaid to the company within 9 months of its year end. This will take the rate up to 35.75%.
- The writing down allowance on main rate expenditure will be cut from 18% to 14%, and on special rate expenditure from 6% to 3%, from 1 April 2026 for companies or 6 April 2026 for unincorporated trades. Any cars with CO2 emissions over 50g/km will qualify for the reduced 3% allowance.
- There will be an extension until March 2027 of the 100% First Year Allowance for qualifying expenditure on zero-emission cars and charging points for electric vehicles.
- We were already aware that Inheritance Tax (IHT) Agricultural Property Relief and Business Property Relief at 100% will only apply to the first £1 million of combined value; above that limit, the maximum relief will be 50%. However, it was announced today that the £1 million allowance will be transferable between spouses and civil partners, which is welcome news.
- Fuel duty remains frozen, and the temporary 5p cut announced in March 2024 will be extended to 31 August 2026.
- Increases in the National Living Wage and the State Pension will be in line with the September 2025 inflation figure of 3.8%.
- Minimum Wage changes will see the hourly rate for those over the age of 21 increase by 50p to £12.71 and for those aged 18 – 20, by 85p up to £10.85. Those aged 16 – 17, or on apprentice schemes, will see an increase of up to £8 an hour from £7.55.
- The ‘two-child benefit cap’ for Universal Credit will be removed, increasing the available benefits for claimants with more than two children.
From April 2027
- Income Tax rates on property and savings income for English and Northern Irish taxpayers will increase from 20% to 22% (basic rate), from 40% to 42% (higher rate) and from 45% to 47% (additional rate). The Government will engage with the devolved Governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current Income Tax powers.
- For under-65s, no more than £12,000 of the annual £20,000 ISA subscription can be invested in a cash ISA; the other £8,000 will have to be in stocks and shares. This is to encourage more investment into markets and specifically the UK and its companies.
Proposals which will kick in at a later date
- A High Value Council Tax Surcharge is to be introduced on properties that are, in 2026, worth more than £2 million. To apply from April 2028, the charge will be £2,500 for properties worth over £2 million, rising to £7,500 for properties worth over £5 million.
- A new mileage based e-Vehicle Excise Duty will be payable on the use of electric and hybrid cars from April 2028.
- From April 2029, the Government will charge employer and employee National Insurance on pension contributions above £2,000 per annum made on a salary sacrifice scheme.
- All VAT invoices are to be electronic from April 2029.
- Company car tax rates were announced last year for 2028/29 and 2029/30. However, to provide long-term certainty, the incentives for purchasing electric vehicles will be maintained.
- The Plan 2 Student Loan repayment thresholds will be frozen until April 2030.
Further articles detailing the changes in the highlights
Explore the articles below to understand the impact of recent tax changes, the reduction in cash ISA limits, and how pension contributions through the salary sacrifice scheme could affect you.
