Autumn Budget 2025

In an unprecedented move from the Deputy Speaker which can only be described as a telling off, reference was made to the increasing occurrence of media leaks in recent Budgets. However, this year it seems to have led to a crescendo and caused the property market and economy as a whole to stall – with more people purportedly leaving the UK. Let’s hope that the Government learn from this and that future fiscal events are not so fraught with rumour and scaremongering.

There are reams of Budget policy documents this year, many of which contain very minor changes to already complex and layered legislation. This was not a Budget advocating tax simplification.

We have however spotted that Bingo Duty will be abolished from April 2026 and think this is worth mentioning, if only for some light relief…

Furthermore, a lot of the proposals that have been talked about over the last few months did not materialise. So, we do not have an exit tax for individuals leaving the UK, increases to Capital Gains Tax, changes to main residence relief, and no change to the amount of National Insurance Contributions partners of LLPs will pay.

From a corporate tax perspective the Chancellor has largely remained committed to the manifesto pledge not to increase the main taxes. However, today’s Budget introduces a wide range of changes – many of them relatively modest – that will affect businesses from an operational tax perspective, will impact effective tax rates over time, and may not deliver the anticipated revenue. It will take time to fully assess the detail and understand how these measures will work in practice, though below is a summary of the new changes likely to have the greatest impact on businesses.

Personal tax analysis

Fiscal drag … continues

The announcement of the frozen thresholds until 2031 was not surprising, but the impact of continued fiscal drag should not be underestimated.

Based on OBR estimates, a further 920,000 people will be brought into the higher rate band as a result. Since the thresholds have been frozen a further 4.8 million people will be paying tax at the higher rate by 2030/31.

Increase in the rate of tax for property, savings and dividend income

There had been speculation that there would be wholesale 2% increase in the basic rate tax (and corresponding reduction in NIC), but this has now been restricted to property and investment income.

For dividend income, from April 2026, the basic rate will increase from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. The additional rate of 39.35% will remain unchanged.

For savings income, from April 2027 (yes, a year later) the new rates will be a 22% basic rate, 42% higher rate and a 47% additional rate.

A whole new rate of tax will be introduced for property income from April 2027 too, along the same lines as the savings income rates.

Those with multiple sources of income will have even more complicated tax computations.

It is interesting that multiple governments continue to penalise landlords. The Chancellor stated that an average landlord currently pays less tax than an employee. However, in particular, those with mortgages only receive relief at the basic rate for their mortgage interest which together with the increased regulation, has resulted in many exiting the market and fewer rental properties available to rent resulting in rental increases. For those remaining in the property market, there may be a further uptick in those incorporating their property business due to the preferable rates of corporation tax and full relief for mortgage interest.

For investors, the upfront income tax relief applicable to Venture Capital Trust investments will be reduced to 20% from April 2026.

For savers, from April 2027 the Cash ISA limit is effectively reduced to £12,000, where the individual saver is under the age of 65.

Pensions

Pensions were largely left untouched, despite speculation that changes may be made to the tax-free lump sum.

However, for those employees who contribute to their pension via salary sacrifice, beware 6 April 2029. From this date, the value of salary sacrificed pension contributions that can receive relief from NIC will be limited to £2,000.

High Value Council Tax Surcharge

Again, wildly speculated about, High Value Council Tax Surcharge (HVCTS) is a form of “mansion tax” which will be introduced in April 2028.

The HVCTS will apply to owners of residential property which was worth £2 million or more in 2026.

According to the policy paper, the “Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million and therefore in scope. Revaluations will be conducted every five years”. This is similar to the current ATED (annual tax on enveloped dwellings) system.

For those owning property at the £2 million or higher threshold may wish to seek their own independent valuations accordingly.

The HVCTS will apply as follows:

A public consultation will take place in early 2026. An area of focus will be ensuring there is a support scheme in place for those who may struggle to afford it although there is no detail on this at this stage.

Inheritance tax (IHT)

There were a few IHT changes announced:

The IHT nil rate band and residential nil rate bands will be frozen for yet another year – now being extended until 2031, resulting in more estates being brought into the scope of IHT. It is estimated that this move will raise a further £130 million.

A £5 million IHT cap will be retrospectively introduced for certain offshore trusts which were settled prior to 30 October 2024 (this being Budget Day 2024, when new legislation was introduced bringing certain trusts into the scope of IHT). However, it appears the cap of £5 million will apply to IHT charges over a ten-year cycle, meaning that this will only be beneficial to trusts whose asset value is in excess of around £83 million.

The APR and BPR allowance of £1 million will also be frozen until 2031. However, in a sensible move it was confirmed that the allowance will now be transferable between spouses/civil partners. Farmers and business owners still face the prospect of a steep increase in IHT after 5 April 2026.

Corporate analysis

Capital allowances

The Chancellor has announced that the main rate for writing down allowances will be cut from 18% to 14% from 1 April 2026. Although this isn’t welcome as it will take longer to benefit from writing down the main pool, the relief will still be available over time. In addition, our expectation is that, given the other capital allowance reliefs available, including the first-year allowance announced today (see below), it may not significantly impact most businesses, and also only represents a timing difference. Those businesses with significant carried forward balances and large capital expenditure should, however, assess the impact.

The Government will extend the 100% first year allowances (FYA) for qualifying expenditure on zero emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle (EV) charge points until 31 March 2027.

From 1 January 2026, it will also introduce a new 40% FYA for main rate expenditure (including most expenditure on assets for leasing and expenditure by unincorporated businesses), which should make the capital allowance regime more beneficial for those who can access the new FYAs.

Transfer Pricing

Despite negative feedback which suggested that this will create extensive administrative burden for businesses, the Government is going ahead with legislation which will require in-scope multinationals to submit an International Controlled Transaction Schedule which will report information annually on cross-border related party transactions. This measure is expected to take effect for accounting periods beginning on or after 1 January 2027 and technical consultation on its design will take place in Spring 2026.

National Minimum Wage (NMW) and Salary Sacrifice changes

Whilst the increase to NMW from 1 April 2026 will be welcome by individuals, this will be an additional cost to businesses, potentially resulting in slower economic growth as arguably already shown by changes made in the last Budget.

In addition, from 6 April 2029, the Government will charge employer and employee NICs on pension contributions above £2,000 per annum made via salary sacrifice. Whilst a few years away, it will undoubtedly create an additional cost to businesses and employees who may end up saving even less than they currently are.

Increased measures for non-compliance and administration

The Government has announced a few changes in the area, which continues the theme over recent years. Perhaps the most notable of these are below:

• It will introduce new powers to tackle promoters of tax avoidance schemes and tax advisors who facilitate these schemes
• It will double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026
• It intends to modernise HMRC’s inaccuracy and failure to issue penalties
• It will modernise the anti-avoidance provisions relating to share reorganisation reliefs which will be legislated in Finance Bill 2025-2

In the same bill it will also legislate the simplification of reporting company appointment and make technical amendment to Corporate Interest Restriction in respect of relief for certain capital expenditure.

EMI, Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) changes

From April 2026, the Government has announced the following mostly welcome changes which should help small and scaling up businesses to attract and retain best talent and access funding:

• Company eligible for EMI criteria will increase to 500 employee limit, gross asset test of £120 million, and share option limit to £6 million. The holding period will also increase to 15 years.
• The VCT and EIS company investment limit will increase to £10 million (£20 million for knowledge intensive companies) with lifetime limit also increasing to £24 million (£40 million for knowledge intensive companies). In addition, the gross asset test will increase to £30 million before share issues and £35 million after, albeit the VCT income tax relief will decrease to 20%.

Changes to CGT relief on disposals to Employee Ownership Trusts (EOTs)

The cost associated with this relief has increased significantly and is perhaps seen as a relief available to those who are well off. The Government has therefore announced it will reduce the 100% relief available to business owners on qualifying disposals to EOTs from 100% to 50% from 26 November 2025.

Business rates

Numerous welcome changes to business rates relief (BRR) especially aimed at small businesses that have been hit the hardest, ranging from reduced multipliers to extended support to retail and hospitality sector and transitional relief for businesses facing large bill increases.

Would you like to know more?

If you have any questions about the Government’s Autumn Budget and how it may impact you, please get in touch with your usual Blick Rothenberg contact, John Bull , Sean Drury or use the form below.

You can also visit our Budget Hub, where you can find our commentary and a range of insights to help you better understand how the Budget may affect you.