Autumn Budget 2025 

Introduction 

The Chancellor delivered the long‑awaited Autumn Budget on 26th November 2025. This Budget focused on tightening public finances, freezing thresholds, increasing certain tax rates, and reforming a number of important reliefs. The measures aim to reassure financial markets but will increase tax liabilities for many individuals and businesses over the coming years. 

Income Tax 

The Budget did not change the basic, higher or additional income tax rates. However, because thresholds remain frozen until 2031, more people are expected to pay higher rates of tax in future. Dividend tax rates will rise from April 2026, and tax rates on savings and property income will increase from April 2027. 

National Insurance and Pension Salary Sacrifice 

From April 2029, only the first £2,000 of pension contributions made through salary sacrifice will be exempt from employee and employer National Insurance. Contributions above this amount will be subject to NICs. 

Capital Gains Tax 

Rates of Business Asset Disposal Relief and Investors’ Relief will increase to 14% from April 2025 and to 18% from April 2026. The Investors’ Relief lifetime limit has been reduced from £10 million to £1 million. CGT relief for sales to Employee Ownership Trusts will reduce from 100% to 50% from November 2025. 

Inheritance Tax 

The nil‑rate band (£325,000) and residence nil‑rate band (£175,000) remain frozen until April 2031. From 2027, unused pension funds will be included in estates for IHT. Agricultural and Business Property Relief will still offer 100% relief on the first £1 million of qualifying property, with 50% relief thereafter from 2031. 

Corporation Tax and Business Measures 

The corporation tax rate will remain capped at 25%. Full expensing continues to be permanent, and the £1 million Annual Investment Allowance remains available. Penalties for late corporation tax filings will double from April 2026. Business rates reform continues, including a new high‑value multiplier from April 2026. 

Capital Allowances 

Full expensing continues for qualifying plant and machinery. A new 40% First‑Year Allowance will be introduced from January 2026 for certain assets. Writing‑down allowances on main‑rate assets will reduce from 18% to 14% from April 2026. 

National Minimum Wage 

From April 2026, the National Living Wage for workers aged 21 and over will rise to £12.71 per hour.  The National Minimum Wage for those aged 18 to 20 will increase to £10.85 per hour.  

Electric Vehicles and Company Cars 

Benefit‑in‑kind rates for company cars will rise in 2028/29 and 2029/30. A pay‑per‑mile charge for electric vehicles will begin in April 2028 at 3p per mile for EVs and 1.5p for hybrids. 

State Pension 

The State Pension will increase by 4.8% from April 2026. Some pensioners with no other income will no longer need to complete a Simple Assessment where small amounts of tax are due. 

HMRC Compliance and Anti‑Fraud Measures 

The government will invest heavily in HMRC’s ability to collect unpaid tax. A new Abusive Phoenixism Taskforce will target directors who repeatedly dissolve companies to avoid tax, and the Insolvency Service will gain additional staff to increase director disqualifications. 

Contact Us 

If you have any questions about the Budget and what it means for you and your business or any other matter, please get in touch.