Key takeaways
- Income tax thresholds are frozen until 2031, meaning wage rises will push more earners into higher bands without any headline rate change. This fiscal drag is expected to raise billions in extra revenue.
- Dividend tax rises by 2% from April 2026, taking the basic rate to 10.75% and the higher rate to 35.75%. The additional rate stays at 39.35%, so directors relying on dividends will pay more.
- Capital gains tax on business asset disposals rises from 10% to 14% in April 2025, then to 18% in April 2026. A GBP 100,000 gain will cost GBP 8,000 more by 2026/27 than it did in 2024/25.
- From April 2026, Business Property Relief and Agricultural Property Relief are capped at GBP 1 million. Pension pots also enter the inheritance tax net from April 2027, increasing estate exposure.
- The two-child benefit cap has been removed, restoring tax credits for third and subsequent children born after April 2017. The National Living Wage rises to GBP 12.71 per hour from April 2026.
Autumn Budget 2025 - Key Points at a Glance
The Budget 2025 delivered by Rachel Reeves on 26 November impacts nearly everyone: households, savers, and businesses. It introduced a mix of tax increases, some reliefs, and a few major structural shifts, and it’s set to shape how individuals and businesses plan their next moves. The key takeaway? Incomes, savings, and property are facing more pressure, although there’s some support for pensioners, low-income workers, and families with children.
Whether you run a small business, rent out property, save money for the future, or are just paying your bills, these changes will affect you.
In this article, we’ll go through the key highlights of the Autumn Budget 2025 and how it affects your take-home pay, profit margins or overall tax bill. Whether you’re focused on income tax, dividend changes, business taxes or support for small companies, you’ll find the information you need right here.
For individuals, pensioners, landlords, and investors, this Autumn Budget 2025 could change how you plan retirement, manage savings, or budget household income. Here’s what Reeves announced, what’s changed, and what you should watch for.
Coming up, we’ll look at:
- What tax and pension changes are announced.
- How your savings, property, and total wealth are affected.
- Who could benefit (or lose out)
- And, importantly, what steps you can take right now to keep your finances secure.
Key Tax Changes & What They Mean
Income Tax & National Insurance
Income tax thresholds will be frozen until 2031. As your wages rise with inflation, more of your income falls into higher tax brackets. That means many people will face a stealthy tax increase. Reeves was upfront about this, saying: “I know that maintaining these thresholds is a decision that will affect working people… I won’t pretend otherwise. Now I’m asking everyone to make a contribution.”
Although the main tax rates - income tax, VAT, and National Insurance aren’t increasing, the frozen thresholds act as a “stealth” tax that will raise about £8 to £26 billion over time.
If you use salary sacrifice for pension contributions, only the first £2,000 a year will be exempt from National Insurance from April 2029. Any contributions above that will be subject to NI, making these schemes less beneficial.
Increase in Dividend Tax Rates
From April 2026, dividend tax rates will rise by 2% to the below tax rates:
- £12,571 to £50,270) increases from 8.75% to 10.75%
- Higher rate (earnings from £50,271 to £125,140) will 33.75% to 35.75%
- Additional rate (earnings over £125,140) will remain at the current rate of 39.35%
Savings, ISAs & Investment Income
You’ll pay more tax on savings interest, rental income, and dividends. Basic-rate taxpayers will see their savings taxed at 22%, up from the current rate. Higher-rate bands will increase as well.
Reeves defended the shift by saying: “It’s not fair that the tax system treats different types of income so differently.”
The cash ISA annual limit will drop from £20,000 to £12,000 for those under 65 starting in 2027. There are no changes for stocks-and-shares ISAs, and if you’re over 65, this new change won’t affect you.
Property, Council Tax & “Mansion Tax”
A new “mansion tax”, a High Value Council Tax surcharge, is coming. Homes valued over £2 million will face an extra annual levy from April 2028: about £2,500 if you’re just above the threshold, rising to £7,500 for homes worth £5 million or more. This applies to both landlords and residents of expensive properties.
A separate property tax is to be created from 6th April 2027. The tax rates will be higher than before:
- Basic rate of 22%
- Higher rate of 42%
- Additional rate of 47%
Capital Gains Tax (CGT)
Selling your business or shares is about to cost you a lot more. From April 2025, the CGT rate on disposing of business assets rises from 10% to 14%. And that’s not the end, by April 2026, it climbs again to 18%.
Gains on carried interest - often relevant for private equity or funds will no longer enjoy CGT treatment from 2026. Instead, they will be taxed at income-tax rates (roughly 34%).
In short, anyone considering selling business assets or shares should prepare for significantly higher tax rates.
Key Insight: Selling a business with £100K gain will cost £8,000 more in tax by 2026/27 compared to 2024/25.
Electric Vehicles & Fuel / Motor Costs
A new per-mile tax will apply to electric and plug-in hybrid vehicles from April 2028, about 3p per mile for fully electric cars, and 1.5p for hybrids. Gradually, this will reduce the cost advantage EV drivers have had over petrol and diesel vehicles.
Fuel duty remains frozen until 2026. However, there are clear indications that fuel costs could rise after that, as the government signals a possible return to pre-2022 levels.
Reeves framed the shift as part of resetting the tax system for the long-term:
“We have to modernise how we raise revenue as our economy changes.”
Two-child benefit limit
The government has scrapped the two-child limit on child benefit, restoring benefits and tax credits for third and subsequent children born after April 2017. This gives bigger families some much-needed relief and should help pull many children out of poverty.
Reeves highlighted the human impact, saying: “We do not believe that the solution to a broken welfare system is to punish the most vulnerable children.”
National Minimum Wages: Effective 1st April 2026
From 1st April 2026 National living wage will rise by 4.1% for workers aged 21 and over from £12.21 an hour to £12.71 an hour, meaning full-time, low-paid workers will see a real boost in their take-home pay.
Minimum wage will also rise by 8.5% for those aged between 18 & 20 going from £10 an hour to £10.85 an hour.
For 16 & 17 year-old and those on apprenticeships the minimum wage will rise by 6% going £7.55 an hour to £8 an hour.
Pensions & Pension-Linked Reliefs
From 2029, pension salary-sacrifice schemes become less generous. Those using salary sacrifice for tax-efficient pension contributions will be affected by this adjustment.
Inheritance Tax (IHT) and Estate Planning
The 2025 Budget keeps the general freeze on personal-tax thresholds meaning more people will gradually be drawn into the inheritance tax bracket.
It’s also getting tighter for business and agricultural property. From April 2026, reliefs for these assets (BPR and APR) will be capped at £1 million. That’s a major shift for anyone looking to pass on a business or farm.
Pensions are also affected. From April 2027, pension pots, which previously escaped IHT, will be subject to it.
The takeaway: If you’re transferring a business, farmland, or a large pension, it’s time to review your estate planning. More estates will fall within inheritance tax, and the resulting bills are set to increase.
Gambling Taxes
Taxes on online/remote gambling are increasing. The government clearly wants to collect more revenue from luxury or optional spending.
- Remote gaming duty will rise to 40% from 21% .
- Online betting tax will rise from 15% to 25%.
- Bingo tax is being abolished from April 2026.
Reeves said these changes target sectors “that can contribute more without adding pressure on working families.”
Milkshake Tax
Excise/sales duties on high-sugar drinks, milkshakes and canned lattes are also being extended and increased, it is just another sign that consumption taxes are being widened.
Economic Outlook & OBR Forecasts
The Office for Budget Responsibility (OBR) expects these changes, including tax increases, to raise about £26.1 billion a year by 2029/30.
Public investment continues at a high level. The government is putting funds into infrastructure, housing, the NHS, and public services, clearly indicating long-term focus on growth, even as taxes rise.
What This Means for Individuals and Businesses
- If you’re an employee receiving pay rises, expect a bigger amount of your income to go to taxes. With thresholds frozen, your take-home pay might be less than you’d planned.
- Savers, landlords, and investors, especially those relying on rental income, dividends, or interest will see lower post-tax returns.
- If you use a salary-sacrifice pension, now’s the time to check if it still offers value for you with the new change coming in.
- Families with children, especially larger ones, finally get some relief. Removing the two-child cap offers extra support and reduces some financial strain.
- Small business owners and property investors now need to take a fresh look at their cash flow, rental returns and overall long-term earnings. Higher taxes and increased costs on property and dividends can reduce cash flow and long-term profits.
- If you own expensive homes or high-end real estate, remember the new “mansion tax” when making investment decisions or considering a sale.
- If you own or use an electric or hybrid car, the tax benefits are getting smaller. This may affect whether you choose one as a company car or for personal use.
- Dividend income and return on investments are no longer lightly taxed. The extra 2% can lower what investors take home.
- Small business owners who choose dividends over a salary will feel the impact most.
- If you’re an investor with a sizable dividend portfolio, prepare for lower net returns, especially if you fall into a higher tax bracket.
- Business owners should consider alternative ways to extract profits. The old “salary low + dividends high” isn’t as effective anymore.
- Selling a business or shares has become more expensive. If you cash out before the new rates take effect, you could save thousands.
- Transferring wealth, whether it’s business shares, property, or pensions, is now more likely to trigger inheritance tax or increase your bill.
- Families planning to pass on pensions will face new tax exposure from 2027, which increases the overall estate value subject to IHT.
- Anyone with a mix of business assets, property and pensions will need a fresh strategy to reduce future liabilities.
- If you’re a landlord, investor, business owner, or retiree, this Budget doesn’t just affect your yearly tax, it changes long-term wealth planning and legacy strategies.
What to Do Next - For You or Your Business
- Review your personal and business budgets. Make sure you consider the impact of higher taxes on income, savings, property and dividends.
- If you have tax-efficient savings accounts or pension plans, review them to see if they’re still adding value. The rules may have changed, so what worked before might not be ideal now.
- Own property or rent out houses? Update your calculations, especially rental returns, to include the new council tax surcharge and increased taxes.
- If you run a small business, expect changes to your net profits. With higher taxes on dividends and property income, your bottom line is likely different this year.
- For families, check eligibility for benefits. Families with more than two children can now claim benefits for every child since the two-child limit has been removed. Make sure you’re not missing out.
- Consider adjusting the balance between salary and dividends to reduce the dividend tax hit.
- Families with higher-value estates should explore trusts, gifting strategies or restructuring options to limit future exposure.
- If you’re planning to sell a business or major assets, consider whether completing the sale before April (or before 2026) makes financial sense.
Final Thoughts
The Autumn Budget 2025 is taking a bold approach, tighter rules on savings and pensions, and extra costs linked to property and investment income. The government is aiming to boost revenue by broadening the tax base and targeting wealth, investment income, and property. At the same time, they’re offering support to low-paid workers, pensioners, and families with children.
With all these updates happening at once, it’s a great time to review your personal and business finances and make sure you’re set up in a smart, tax-efficient way for the years ahead.
If you want help working through the new rules or planning ahead, GoForma’s small business accountants are here for you. We’ll look at your situation, explain exactly how the new budget affects you, and guide you on the most tax efficient steps to take next. Book a free consultation with us today and get personalised and practical tax advice from our experts.
Resources:
- HMRC Autumn Budget 2025 Document
- Office for Budget Responsibility Economic and Fiscal Outlook
- Rachel Reeves' Budget Speech transcript
⚠️ IMPORTANT DISCLAIMER
This article provides general information about the UK Autumn Budget 2025 for educational purposes only. It is NOT personalised financial or tax advice.
Tax situations vary significantly based on individual circumstances, business structure, income sources, and personal financial goals. Before making any financial decisions based on this information:
- Consult a qualified accountant in London or tax adviser
- Review your specific circumstances
- Verify all information against official HMRC guidance
GoForma accountants are available for personalised consultations.
