November 2025 Budget

The Autumn Budget 2025, delivered by Chancellor Rachel Reeves, continued the government’s focus on raising revenue through freezes and reforms across the tax system. The most significant measure is the extension of the personal allowance and income tax band freezes to April 2031, a move expected to bring millions more taxpayers into higher rates over the coming years. Further increases were announced to dividend tax rates from April 2026 and to savings and rental income tax rates from April 2027. Capital Gains Tax reliefs were tightened, with reductions to Employee Ownership Trust relief and confirmation of previously announced increases to Business Asset Disposal Relief rates. No major changes were made to pension tax reliefs, though future restrictions on salary sacrifice were confirmed. For businesses, corporation tax rates remain unchanged, but capital allowances will reduce from April 2026, and the freeze on the employer NIC threshold has been extended to 2031.

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Budget Summary Report

Top 5 Things Our Clients Need to Know from the Autumn Budget 2025

1. Income Tax & NIC Thresholds Frozen Until 2031 — Stealth Tax Rises for Many

The personal allowance, higher-rate threshold, employer NIC threshold (£5,000), and the upper earnings limit for employees will now remain unchanged until April 2031.
Impact:

Directors and employees will drift into higher tax bands as wages rise.
Employer NIC costs will continue to increase as thresholds stay static.
Higher marginal tax rates (including the 60% band between £100,000–£125,140) will affect more people each year.

2. Dividend, Savings, and Rental Income Taxes Increase (From 2026–27)

Several rises will impact company directors, investors and landlords:

Dividend tax increases by 2% from April 2026 (higher rate becomes 35.75%).
Savings and property income tax rates rise by 2% from April 2027 (basic rate 22%, higher 42%, additional 47%).
Dividend allowance remains just £500.
Impact:
Directors taking dividends will face higher tax bills.
Landlords with rental income should expect materially higher liabilities.
Savers receiving interest above the allowance may need to file returns.

3. Capital Allowances Tighten for Companies from April 2026

While corporation tax rates remain unchanged, key reliefs shift:

Main writing-down allowance falls from 18% to 14%.
New 40% First Year Allowance starts 1 January 2026 (where full expensing doesn’t apply).
Full expensing remains available only to companies, not unincorporated businesses.
Impact for limited companies:
Big effect on companies with recurring capital expenditure.
Investment timing over the next 18 months becomes more important to optimise relief.

4. Salary Sacrifice Restricted from April 2029

The personal allowance, higher-rate threshold, employer NIC threshold (£5,000), and the upper earnings limit for employees will now remain unchanged until April 2031.
Impact:

Directors and employees will drift into higher tax bands as wages rise.
Employer NIC costs will continue to increase as thresholds stay static.
Higher marginal tax rates (including the 60% band between £100,000–£125,140) will affect more people each year.

5. Significant Changes for Landlords, Charities & Payroll Team

A cluster of sector-specific updates worth flagging:

Landlords / Property

From 2027/28, rental income tax rates will rise by 2%, increasing liabilities for many landlords (see point 2).
A new High Value Council Tax Surcharge applies from April 2028 to residential properties worth over £2 million.

Charities

From April 2026, a new VAT relief removes the need for businesses to account for output VAT when donating goods to charity, provided items are used directly in charitable activities or distributed to people in need. This is expected to make in-kind donations easier and more cost-effective.
Changes to agricultural and business property reliefs from April 2026 may affect charitable estates and legacy planning, particularly where land or trading assets are involved.

Payroll Providers / Employers

From April 2026, employees can no longer claim tax deductions for homeworking expenses unless the employer reimburses them. Employers can still make qualifying reimbursements tax-free, so policy updates may be required.
Tax-free reimbursement rules are widened to include eye tests, homeworking equipment and flu vaccinations.
From April 2026, umbrella company rules tighten, with agencies and end-clients jointly liable if an umbrella company fails to account for PAYE/NIC correctly.