Autumn Budget 2025

Nimesh Shah, CEO

Even before Rachel Reeves stood up to deliver her Budget 2025 speech, this is already one of the most damaging Budget statements in living memory and will leave a lasting impact for a generation.

The 2% increase to dividend tax rates, property and savings (raising over £2 billion) presumably breaks Labour’s manifesto pledge not to increase Income Tax.

The reduction in the cash ISA limit to £12k will cost a higher rate taxpayer over £140 in income tax (assuming interest rate of 4.5% and no personal savings allowance).

The ISA regime has just been made (even more) unnecessarily complicated by having a different regime for over-65s. I understand the logic but this is making a mess of ISAs.

The changes to salary sacrifice pensions from 2029 are another damaging blow to business after last year’s employer’s NIC increase. This will be inflationary and lead to further job losses.

It was a certainty that personal tax allowances and thresholds would be frozen in today’s Budget. I wasn’t expecting it would be for another 3 years and will drag almost 1 million people into higher rate (40%) tax.

Changes to dividends, property income and savings introduces new rates into the personal tax system which add further complexity into the already complicated regime.

The real impact of frozen tax allowances and thresholds. Someone earning £20k is almost £600 worse-off today; they will be over £1,000 worse-off in 2031.

Sean Drury, Partner

The leak of the report is the icing on the cake in respect of how this entire budget process has been run over the last three months in the run-up Budget Day. It is pretty unprecedented that not just the economic forecast but the actual budget items are released prior to the Chancellor speaking and this means that she is going to have to speak while the market is reacting. The stress that has been caused by leaking throughout this process more than the traditional three week notice through which budget purdah is enforced has been a disaster and has caused undue stress to a number of people in society. It should be called the Office of Budget Irresponsibility.

The main tax items which the chancellor will need to explain are:

• Extension of personal tax threshold freezes to 2030–31 (expected)
• National Insurance charged on salary-sacrificed pension contributions above £2,000 (expected)
• Increases to tax rates on dividends, property, and savings income (not expected)
• New mileage-based charge on electric and plug-in hybrid cars from April 2028 (expected)
• Reduction in writing down allowances for corporation tax (not expected)
• Reforms to gambling taxation and capital gains tax reliefs (interested in detail on the CGT)
• High-value council tax surcharge for properties over £2 million from 2028 (expected as band G/H revaluation was going to be a nightmare)

Further freeze to fuel duty until September 2026 (giveaway – but shouldn’t have been done).

Interested to see what will be in the actual detail but not looking at all pro-business, pro responsible investor/saver or pro worker.

The mansion tax from £2 million will require a huge amount of work. There is going to be a huge impact in the London boroughs, and it will be interesting to see what year they will work towards as the London property market is up and down. There will be an industry in putting in devaluations (liens on property for example) so will be incredible to see how they will proceed – the last valuation was caused by Poll Tax Crises in 1991 and no-one has faced up to this.

Pension salary sacrifice issue is going to be huge – the employer NIC charge is significant (and they said they would not impose more issues for business in this arena) what will happen is company will not be able to fund their contributions as much (it would cost them double the saving they had – I can explain this) therefore lower investments and disincentive to save.

Cash ISA restriction expected (though I think she got it wrong way round in her statement!), however looking over periods of time ISA go down as well as up – however it will force us down a more US route which does create liquidity, but I did not hear anything about the requirement to invest in UK rather than higher growth overseas structures. I would have thought the £8,000 should also have required to be invested in UK equities.

However, a number of these measures are deferred therefore not immediate in one way is a bit of a relief but we will have a general depression around long term investment and gloom now with every year deferred pain appearing – it is like waiting for a painful operation on a long term NHS waiting list.

Am not sure the Class 2 top up scheme for pensions was a “Tory policy” – too much blame when it is not due – this is just how pensions work and was simply clarified.

Freezing thresholds will actually be an accounting entry and only affect the future, but pensioner relief is welcome.

On landlords it is completely false as they are limited on debt reduction to 50% – the cliff edge will mean many more landlords will reduce stock so rents will significantly increase.

She also completely brushed over the increase on people who save – why save anymore? The principle is not the same.

Heather Powell, Partner and Property and Construction Lead

Income Tax on rents – an increase of 2% on the basic rate band (20 to 22%); and higher rate bands (40 to 42%, 45% to 47%) is likely to be the very final straw for many landlords who own their buy to let properties personally – restrictions on the percentage of interest paid that can be deducted from rental income when calculating tax liabilities, increasing legislation including the Renters Reform Bill, and a significant slowing in the growth in the value of houses and flats will ensure even more investors to sell. Potentially good news for first time buyers, but a major issue for those who rent their home. The mobility of the UK workforce is likely to be significantly impacted, impacting on productivity for the UK.

Planning reform changes are to be welcomed, but the Chancellor needs to look beyond the headline – houses will be built if there are buyers – the fall in demand for homes has led to the fall in new homes built in the UK in the last year – not issues with the planning system.

The increase in the tax payable on investment income can be mitigated by the wealthy through the use of Family Investment Companies – but the working man will be paying more tax on interest earned on bank accounts opened to save for deposits for homes, family holidays and a new car – is this fair?

Is HMRC going to start a recruitment campaign to build a team to help the +90 year olds who are offline who will be required to file personal tax returns from 2027? If they start now the personnel should be in role and trained in time to ensure that our elderly pensioners can comply with their filing requirements.

Neil Insull, Partner, Corporate Tax

It’s crazy to think that 100% of pensioners will be taxpayers, and significantly more young people on minimum wage will be bearing tax on their wages.

For many individual investors, the announcement to raise income tax rates on dividends, property and savings income from 2027 will swing the pendulum in favour of investing through a company. I expect to see personal and Family Investment Companies being used more.

The stamp duty holiday for IPOs in the UK will help liquidity and sentiment, but on its own it won’t fix the UK’s IPO problem. Founders need certainty, stability and capital incentives — not just temporary tax holidays. This is a helpful start but not bold enough.

Employee ownership trusts were brought in with much fanfare in 2014 to simplify succession planning and bringing corporate ownership to employees. It is therefore disappointing to see a removal of the CGT exemption on sales and bring 50% of gains into charge. This will almost certainly jeopardise the wish for entrepreneurs to pass their shares to employees in the future.

The Budget was, again, silent on major changes to the corporation tax regime. A relief for many but another opportunity missed by the Chancellor to reduce the tax burden for SMEs particular after the rise in employers NIC in April. In the hospitality sector, many smaller companies are on the brink of collapse, and while the reduction in business rates is welcome, if not a little late, business owners with significant sums of money at risk understandingly expect the Government to do more.

Fiona Fernie, Partner, Private Client

The yield from council tax increases will be minimal and cause additional admin costs. The freezing of the thresholds will mean many additional relatively low-income individuals will be brought into the tax net, including people who will have to file tax returns for the first time. This will put further pressure on HMRC to deal with the compliance associated with those returns, which is likely to cause a further dip in service levels. Any new staff being recruited – as previously announced will need a period of training so will not really be much use in alleviating the problem in the initial stages.

The Chancellor speaks about rebuilding the economy and blames the inherited “black hole” but she is still increasing the black hole with her increases in expenditure.

Council tax surcharge is thought to likely affect 100,000 homes – mostly in the Southeast. The OBR estimates it will raise around £0.4 billion. This is a very small amount, particularly given that there will be a huge additional administration burden to revalue properties in bands F, G and H to determine if they are now valued above £2 million and if so where they sit within the price bands which will determine the amount of the additional tax. That admin burden will inevitably eat into the amount collected.

The proposals also just emphasise the North South divide that Labour claim to want to “level up” since the higher valued home in the South already drain their owners’ resources with bigger mortgage payments.

The taxing of Electric Vehicles per mile is presumably on mileage driven in the UK. The difficulty will be working out how they are going to measure the mileage since not all mileage on the odometer is necessarily in the UK. However, there is some sense in such a tax – EVs are generally heavier than petrol/diesel cars and do more road damage.

Simon Gleeson, Partner

Middle-England has ultimately been squeezed with Labour breaking its manifesto by now freezing personal tax allowances and adding 2% tax, going after savings for the future as well as investment incentives which frankly can go down as well as up which is the usual required disclaimer when promoting such investment schemes.

Rachel Reeves missed an opportunity to highlight the recently confirmed £55 billion of long-term Research and Development (R&D) funding available to maintain the UK as the leading partner of choice to international investors. The economic benefits have been proven: innovation and job creation facilitated by UK’s vast diverse highly skilled talent-pool across universities and research facilities.

Malli Kini, Partner, Private Client

A 2% rise in dividends won’t just raise revenue – it will change behaviour. More money will stay locked in companies or be diverted into planning structures instead of being reinvested in the economy.

Dividend rate increases of 2% will be a direct tax rise on entrepreneurial reward. Dividends are how most founders are paid once they’ve taken commercial risk and paid Corporation Tax.

Scrapping salary sacrifice for pensions dismantles one of the UK’s most effective and widely used saving mechanisms. Over 7 million employees rely on it to boost pension contributions and reduce National Insurance, while employers depend on it to manage payroll costs efficiently.

Crucially, salary sacrifice is also one of the only practical and legitimate planning tools available to taxpayers trapped in the £100,000 tax cliff edge, where the withdrawal of the personal allowance creates an effective 60% marginal tax rate between £100,000 and £125,140. Removing it would trap thousands of senior professionals including NHS consultants, senior public sector staff, finance professionals and business owners. They will be in punitive tax territory with no realistic route out other than asking for lower pay!

Paul Haywood-Schiefer, Director, Private Client

Salary sacrifice being brought into NIC is unlikely to change taxpayer behaviour much as they won’t really notice the difference (assuming the net amount put into the pension pot) but employers will feel the pinch. Another incentive to turn to AI as quickly as possible to reduce the workforce. A problem that the Government doesn’t seem to think is coming with their forecasts for unemployment reducing to 4.1% by 2030.

Robert Salter, Director, Global Mobility

The decision to limit salary sacrifice arrangements for employee pension contributions from April 2029 will create additional costs for both employees and employers. The sad reality is that it will also result in reduced contributions on a going forward basis and increase the ‘savings crisis’ that is already threatening the long-term retirement of British workers.

The extension of fiscal drag – i.e. the freezing of tax allowances and thresholds until April 2031 – is in reality a direct tax rise on nearly all workers (and indeed many pensioners too). It means that the tax bands will have been raised for 10 years at the end of this period and it is particularly punitive for the lowest paid, who are being drawn into income tax in ever increasing numbers.

It is interesting to note that the OBR Report for the Budget highlights that the increase in Employer’s NIC costs that arose from the last Budget – and came into effect from April 2025 – have been a significant factor behind the increase in unemployment in the last 12 months.

The decision to have Alan Milburn review the causes for ‘rising youth economic inactivity’ seems to be unnecessary. The reality is that many commentators would just highlight that the consistently high increases in the national minimum wage – particularly the wage which applies for the under 21s – together with the increase in employer NICs mean that it is inevitable that employers are considering whether to employee someone – especially someone with no work experience – more and more closely.

Artur Vorobyev, Director

The Chancellor confirmed that the full £20,000 ISA allowance will remain, but £8,000 of this will now be ring-fenced exclusively for investment purposes. This change is likely to please wealth managers and asset managers, as it encourages greater allocation to Stocks & Shares ISAs.

However, the proposed pension reform specifically the cap on National Insurance relief for salary-sacrificed contributions above £2,000 could have the opposite effect. It may discourage higher pension contributions, reducing inflows into pension funds and negatively impacting assets under management (AUM). A more detailed scenario analysis will be required to assess the overall impact on the sector.

Winnie Cao, Partner and China Hub Lead

The 2% income tax increase for dividend, property and savings income means that more people will be encouraged to use Family Investment Company structure to hold assets, reducing the ongoing income tax on a personal level.

Given the introduction of the high value council tax surcharge, this will further hit the prime central London market. Could this be a good timing for investors to find a bargain, or restructure their property portfolio?

While it was encouraging to hear the Chancellor talk about making the UK an attractive destination for entrepreneurs, it is disappointing that no measure comes with it to back up her claim. It would have been simple to switch back to the £10 million Business Asset Disposal Relief (previously known as Entrepreneur’s Relief), rewarding entrepreneurs create and grow businesses in the UK who will bring the much-needed vibrancy to the country.

David Livitt, Partner, Global Mobility

US taxpayers will now reconsider holding income-producing assets in the UK vs US and favour US mutual funds/ETFs (avoiding UK funds because of PFIC rules, and consider shifting investments toward growth assets as less current income. Does this make UK reporting more complex?

Michael Holland, Partner and Lead on US Expansion

The loss of tax-free pension salary sacrifice means Americans in the UK have one less opportunity to mop up excess Foreign Tax Credits. Overall it is encouraging for Transatlantic Businesses/US Expansion businesses that the USA as a key partner is mentioned in the first 60 seconds and that boosting international trade is later referenced as part of positive growth story.

The increase in UK tax on property income creates another large gap between the US & UK taxation of property due to difference in US depreciation deduction and creating more excess foreign tax credits. Planning will be needed around how long to hold these properties in order to maximise the use of the Foreign Tax Credits. The UK is become a more expensive location for Americans to continue to live.

Bal Lota, Partner, Global Mobility

Increases to the UK income tax on personal investment income is unwelcomed news to Americans. This is likely to result not just higher tax costs on investment income when looking at the worldwide tax cost (most likely to be UK & US), but also a frustration that they might have foreign tax credits which are wasted if not used within 10 years.

Tomm Adams, Partner, Global Mobility

The widely speculated cap on salary sacrifice contributions to workplace pension schemes at £2,000 has been confirmed – but with implementation delayed until April 2029. It is predicted to raise £4.7 billion in the first year of implementation.
This would protect value for lower earners but for someone earning say £60,000 a year and contributing 5% via salary sacrifice, it will cost them an additional £20 a year. This might not sound like much, but it will cost the employer an additional £150 a year.

I expect to see employers reining in the generosity of their contributions – for example curbing additional matched contributions for those using salary sacrifice – and a wider effect on salary increases and bonus payments in general, which is not good news for workers and growth in the economy overall. It will have a material effect on UK retirement readiness.

Mandy Girder, Partner and Media Lead

Unlike previous budgets there is no targeted support for arts, media or culture – despite the promised “commitment” to the creative industry. The proposed increase in taxes to dividend, property income and savings, directly reduce the net earnings of freelancers, incorporated creatives and content creators who rely on such investment income between projects.

Where freelancers use salary sacrifice pension schemes they too will lose National Insurance exemptions on contributions above £2,000 per annum, diminishing previously essential long tern savings advantages. The budget makes it a tough operating environment for independent artists and freelancers, it is disappointing that these individuals have not been considered. The creative industry needs more support, not tougher sanctions.