Autumn Budget 2025: Key Tax Changes

Chancellor Rachel Reeves delivered the Autumn Budget 2025, introducing measures

expected to raise £26 billion in taxes. The Budget includes an extension to the freeze on

personal tax thresholds, higher taxes on investment income, and increases to the national

minimum and living wages.

We’ve pulled together the main updates affecting personal tax, investment income, minimum wage, ISAs, pensions, inheritance tax and business taxes — all in one place.

There’s quite a bit to cover, so grab a cuppa and have a read through to stay up to date with anything that might impact you or your business.

Personal Tax Thresholds Frozen Until 2031

The government has extended the freeze on personal tax thresholds, impacting taxpayers as wages rise with inflation.

• Personal tax thresholds frozen until April 2031.

• This freeze acts as a stealth tax, increasing the number of individuals falling into higher tax brackets.

• No increase in headline rates of income tax or National Insurance Contributions (NICs).

  
  

Increased Taxes on Investment Income

The government is raising taxes on various forms of investment income, affecting landlords and investors.

• Property income tax rates will rise by 2% from April 2027: 22% basic rate, 42% higher rate, and 47% additional rate.

• Dividend tax rates will increase by 2% from April 2026: basic rate from 8.75% to 10.75%, higher rate from 33.75% to 35.75%. ​

• Savings income tax rates will also rise by 2% across all bands starting April 2027.

National Living and Minimum Wage Increases

The national living wage and minimum wage rates are set to increase, impacting employer costs.

• National living wage will increase by 4.1% from £12.21 to £12.71 starting April 2026. ​

• Minimum wage for 18-20 year-olds will rise by 8.5% from £10.00 to £10.85. ​

• Minimum wage for 16-17 year-olds and apprentices will increase by 6% from £7.55 to £8.00. ​

Changes to ISA Limits and Cash Savings

New limits on cash ISAs will be implemented, affecting savings strategies for under 65s. ​

• From April 2027, under 65s can save only £12,000 per year into cash ISAs. ​

• The remaining £8,000 of the £20,000 annual allowance will be reserved for non-cash ISA investments.

• Over 65s will retain the ability to save up to £20,000 in cash ISAs annually. ​

Pension Salary Sacrifice Cap Introduced

A new cap on salary-sacrificed pension contributions will be introduced, affecting tax efficiency. ​

• A £2,000 annual cap on salary-sacrificed pension contributions exempt from NICs will take effect from April 2029. ​

• Contributions above this cap will be subject to ordinary NICs. ​

• This change allows time for adjustments before implementation.

Employment Tax Changes and Homeworking Expenses

Significant changes to employment tax treatment and homeworking expense claims are on the horizon. ​

• Employees can no longer claim tax deductions for non-reimbursed homeworking expenses starting April 2026. ​

• Employers can still reimburse eligible homeworking expenses tax-free. ​

• Statutory payments for cancelled shifts will be treated as taxable earnings from 2026. ​

Inheritance Tax Relief Adjustments

Changes to inheritance tax relief will impact estate planning strategies.

• From April 2026, 100% relief for business and agricultural property applies only to the first £1 million of combined assets. ​

• Assets above £1 million will receive only 50% relief, making half the value subject to inheritance tax. ​

• Unused £1 million allowance for 100% relief is transferable between spouses. ​

Business Tax Changes and Employee Ownership Trusts

New tax measures will affect businesses, particularly regarding employee ownership trusts and capital gains tax.

• From November 26, 2025, only 50% CGT relief will apply to disposals to Employee Ownership Trusts. ​

• Employee limit for Enterprise Management Incentives increased from 250 to 500 employees.

• Gross assets limit for EMI schemes raised from £30 million to £120 million.

VAT and Customs Changes for Businesses

VAT registration thresholds remain unchanged, providing relief for small businesses. ​

• Business donations to charities will receive VAT relief starting April 2026. ​

• Customs duty relief on low-value imports will be removed by March 2029. ​

• All APD rates will increase by RPI from April 2027. ​

High Value Property Surcharge Introduced

A new annual charge for high-value properties will be implemented, affecting property owners. ​

• A high value council tax surcharge will apply from April 2028 for properties valued over £2 million. ​

• The charge starts at £2,500 per year, increasing to £7,500 for properties valued above £5 million. ​

• The owner, not the occupier, will be liable for this surcharge.

Transport and Leisure Tax Adjustments

Changes to transport and leisure taxes will impact various sectors.

• Air Passenger Duty rates will increase by RPI from April 2027. ​

• Fuel duty will see a gradual return to 2022 levels starting September 2026. ​

• Remote gaming duty will increase to 40% from April 2026, with new rates for remote betting introduced in 2027. ​

Administrative Measures to Close Tax Gaps

New measures aim to enhance tax compliance and enforcement. ​

• £64 million will be invested to improve HMRC's debt management capacity. ​

• A dedicated 'hidden economy' team will target sectors with significant tax issues starting April 2026. ​

• Late submission penalties for quarterly updates will not apply for the 2026-27 tax year. ​

Key Dates for Upcoming Tax Changes

• April 2026: National living wage increase, dividend tax rise, inheritance tax relief changes. ​

• April 2027: Property income tax increase, savings income tax rise, ISA cash cap introduced. ​

• April 2028: High value council tax surcharge begins, electric vehicle excise duty introduced. ​

• April 2031: Personal tax threshold freeze ends. ​