Autumn Budget 2025
Autumn Budget Summary
26th November 2025
Below is a summary of the key announcements made by the Chancellor, Rachel Reeves, in her second Budget speech to the House on 26th November 2025.
With the Office for Budget Responsibility upgrading their forecast for real GDP growth to 1.5% in 2025, an increase of 0.5% since March, the Chancellor was able to avoid raising Income Tax rates and uphold a key election commitment. Overall, this Budget presents a series of significant, tax-raising measures designed to support long-term economic growth while easing ongoing cost-of-living pressures.
As always, we will take care of any changes that affect your payroll, company tax return, personal tax return, business tax compliance, or any advisory services we already manage for you.
Once HMRC and the government release the detailed guidance, we will interpret what the changes mean for individuals, identify how they impact you and/or your business, contact you where relevant with tailored advice, update payroll or tax calculations as required and support you with any planning opportunities that arise.
Key Tax Changes
In this section we’ve focused on areas we feel are most likely to impact tax planning, personal tax or business decisions:
Income Tax: The government has announced that the current tax thresholds will remain frozen for a further three years until April 2031. This means the personal tax allowance, which is the amount you can earn before paying Income Tax, will stay at £12,570. The higher rate threshold will remain at £50,270. It's important to note that there are slight differences in Scotland, where Income Tax rates and thresholds are set by the devolved government.
With the Income Tax bands frozen until 2031, more taxpayers will be dragged into higher tax brackets as their income rises. As wages increase, many will find themselves paying 40% or 45% tax without any increase in their allowances to offset this.
Whilst the basic, higher and additional rate thresholds will remain frozen for employment or self-employment income, higher Income Tax rates were announced as part of the Budget measures for property, savings and dividends.
From April 2026, dividend tax will increase by 2%, with the ordinary rate rising from 8.75% to 10.75% and the upper rate from 33.75% to 35.75% (the additional rate remains at 39.35%).
In April 2027, new rates will also come into force for property and savings income. The property basic rate will rise to 22%, with the higher rate at 42% and additional rate at 47%. The savings rates will also match these rates. Existing exemptions, such as tax- free interest allowances for basic and higher rate taxpayers, will remain in place.
Pension changes: From April 2029, salary sacrifice pension contributions will be capped, with only the first £2,000 per person per year remaining exempt from National Insurance. Contributions above this threshold will be subject to employer and employee NICs. This change is expected to primarily affect higher earners and those making larger pension contributions.
Writing-down allowances: From 1st April 2026 for Corporation Tax and 6th April 2026 for Income Tax, the rate of writing-down allowances for main rate assets will be reduced from 18% to 14%. This will makes investing in some capital items less attractive, unless they qualify for full expensing.
Electric Vehicle Excise Duty (eVED): In April 2028, the government will introduce eVED, a new per-mile charge for electric and plug-in hybrid cars. Electric vehicles will pay 3p per mile. Plug-in hybrid vehicles will pay a reduced rate of 1.5p per mile, which is half of the electric car rate. This new charge aims to ensure electric vehicle drivers contribute to road maintenance, as the rise in electric vehicles reduces revenue from traditional fuel duties.
Whilst this section is relevant to many clients, these changes are routine updates that we will manage on your behalf if we look after these areas for you:
Personal Tax
National Living Wage (NLW): The NLW, which applies to workers aged 21 and over, will increase to £12.71 per hour from April 2026, marking a rise from its current rate of £12.17.
National Minimum Wage (NMW): The NMW for 18 to 20-year-olds will increase from £10.00 to £10.85 per hour from next April. The increase in the 18 to 20-year-old rate narrows the gap between the NMW and the NLW. The NLW rate may be extended to 18- 20 year-olds in future years. The NMW rates for 16 to 17 years old and the Apprentice Rate will also increase from £7.55 to £8.00.
Business Tax
Corporation Tax: There are no proposed changes to Corporation Tax rates. The Corporation Tax main rate will remain at 25% and the small profits rate at 19%. The government will double the penalty for taxpayers submitting a Corporation Tax return late from 1st April 2026.
First Year Allowances: From 1st January 2026, the government will introduce a new 40% First Year Allowance for main rate expenditure, covering most spending on assets for leasing and expenditure by unincorporated businesses. This new allowance is designed to encourage investment in key assets early on, offering a significant tax break.
Business rates relief: The government is fulfilling its promise to rebalance the business rates system in England by introducing permanently lower tax rates for retail, hospitality, and leisure (RHL) properties, which will benefit over 750,000 properties. Starting in 2026-27, the RHL business rates multipliers will be 5p lower than the national equivalents, setting the small business RHL multiplier at 38.2p and the standard RHL multiplier at 43p.
The government will also introduce a higher rate on high-value properties with rateable values of £500,000 or more. The high-value multiplier will be set at 50.8p in 2026-27, which is 2.8p higher than the national standard multiplier.
Following a business rates revaluation, all ratepayers will pay lower tax rates than currently, with the small business multiplier dropping to 43.2p and the standard multiplier to 48p. To support businesses affected by revaluation, the government is providing a £4.3 billion support package over three years. This includes Transitional Relief for the largest ratepayers and expanded support for small businesses, including independent shops and pubs.
The government is also continuing to reform the business rates system, including offering two years of Small Business Rates Relief for businesses expanding into new properties and conducting a review to address barriers to investment.
Van and car benefit charges: The government will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6th April 2026.
In this section we’ve focused on areas that may affect you personally:
Two-child limit for Universal Credit (UC): The two-child limit for UC, introduced in 2017, will be scrapped from April 2026. The government expects this change to lift 450,000 children out of poverty by allowing families to receive full support for all their children, rather than being capped at two. The decision follows years of campaigning from charities and MPs, who argued that the limit unfairly penalised larger families and contributed to rising child poverty.
High Value Council Tax Surcharge: Starting in 2028-29, the government will introduce a High Value Council Tax Surcharge on residential properties in England worth £2 million or more. Local authorities will collect the surcharge on behalf of central government. The charge is set to start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million.
ISA, Junior ISA, Child Trust Funds and Lifetime ISAs: From 6th April 2027, the annual limit for cash ISAs will be reduced to £12,000, while the overall subscription limit for ISAs will remain at £20,000. However, savers aged 65 and over will still be allowed to save up to £20,000 in a cash ISA each year.
• Junior ISAs will remain at £9,000 until April 2031
• Child Trust Funds will remain at £9,000 until April 2031
• Lifetime ISAs will remain at £4,000 until April 2031
Employee Ownership Trusts (EOTs): The government will reduce the Capital Gains Tax (CGT) relief for EOTs from 100% to 50% on qualifying disposals. This change will be legislated in the Finance Bill 2025-26 and will take effect on 26th November 2025.
Air Passenger Duty (APD): From 1st April 2027, the government will uprate all rates of APD in line with Retail Price Index (RPI) inflation. The new rates will be rounded to the nearest penny.
Tobacco Duty rates: The duty rates for all tobacco products increased by the tobacco duty escalator of 2% above inflation (based on the Retail Price Index (RPI)). The changes took effect at 6pm on 26th November 2025.
Vaping products duty (VPD): A new duty of £2.20 per 10ml of vaping liquid will be introduced from 1st October 2026.
Alcohol Duty Uprating: The alcohol duty rate will be uprated with the RPI on 1st February 2026 to maintain its current real-terms value.
Fuel duty: The government has announced that the 5p fuel duty cut will be extended for a further 6 months until 31st August 2026, providing continued relief at the pumps for drivers.
Customs duty relief: From March 2029 at the latest, the government will remove the customs duty relief on low value imports valued at £135 or less, meaning these items will be subject to customs duty.
Gaming duties: The government announced changes to online gambling duties in response to rising concerns about gambling-related harm. From April 2026, the Remote Gaming Duty will increase from 21% to 40%, reflecting the higher levels of harm associated with online gaming compared to betting. A new Remote Betting Rate of 25% will be introduced in April 2027 under General Betting Duty, maintaining a clear tax distinction between betting and gaming. However, remote horseracing bets will remain at the existing 15% duty.
Bingo Duty will be abolished from April 2026, and the government will allocate an extra £26 million over the next three years to the Gambling Commission to tackle the illicit gambling market. These measures aim to address the growth of online gambling whilst at the same time supporting responsible gaming practices.
We're here to support you but please be aware that until the government publishes the technical guidance, we cannot yet provide advice on how the measures will be implemented.
You are always welcome to contact us with questions, and we will answer what we can now and revisit anything requiring further clarity once more information is released.
