Autumn Budget 2025 and what it means for your business?
Chancellor’s Autumn Budget – 26 November 2025
After months of intense speculation, policy leaks, and a series of last-minute adjustments that unsettled investors and business owners alike, the Chancellor, Rachel Reeves, has finally delivered her much-anticipated second Budget. Presented unusually late in the year, this Autumn Budget sets out one of the most significant fiscal resets in over a decade and its impact will be felt across UK businesses of all sizes.
Reeves framed this Budget as a “programme for long-term national renewal”, signalling a shift away from short-term interventions and towards structural reforms aimed at productivity, investment, and economic stability. For business owners, entrepreneurs, and company directors, the announcements made today go far beyond headline tax changes; they reshape everything from investment reliefs and employment costs to regional development and compliance expectations.
In this post, we look at the key measures announced in the Autumn Budget 2025, what they mean in practical terms for UK businesses, and how you can position your company to stay compliant and take advantage of new opportunities.
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Let’s dive into the major announcements and how they could shape your financial planning for the year ahead.
Key Tax and Policy Changes Already Announced
Before examining the new measures unveiled in the Autumn Budget 2025, it’s worth revisiting the significant tax and regulatory changes already confirmed by the government over the past year. Many of these come into force between 2026 and 2028 and will materially shape business planning, investment decisions, and personal tax strategies across the UK.
Corporation Tax capped at 25% for the duration of parliament
The Chancellor has confirmed that the main rate of Corporation Tax will remain fixed at 25% until at least 2029. While this brings medium-term certainty for financial forecasting, it also locks in the post-2023 rate increase, affecting profit extraction, investment planning, and dividend strategies for company directors.
Tax thresholds frozen until 2028
Personal tax thresholds, including income tax bands and National Insurance limits, are now frozen until April 2028. This “fiscal drag” is expected to push millions into higher tax bands as wages rise – contributing to what the Office for Budget Responsibility has described as the highest overall tax burden in 70 years. Government forecasts suggest total taxation will reach 38.3% of GDP by 2031.
Inheritance Tax (IHT) thresholds frozen until 2030
The nil-rate band (£325,000) and residence nil-rate band (£175,000) remain unchanged until at least April 2030. More estates will fall within the scope of IHT unless active planning is undertaken, especially given rising property values.
Capital Gains Tax – Business Asset Disposal Relief (BADR) changes
From April 2026, the BADR rate will rise from 14% to 18%. This increases the tax cost for business owners selling qualifying assets, shares, or whole companies, and may accelerate some exit planning decisions during 2025.
IHT Agricultural and Business Property Relief capped at £1m
From April 2026, the previously unlimited 100% reliefs for eligible agricultural and business property will be capped at £1 million per estate. This is a major shift for family-owned businesses and farms, prompting a need for early succession and trust planning.
Pension pots brought into the scope of IHT from April 2027
For the first time, defined contribution pension pots will form part of an individual’s taxable estate on death. This fundamentally alters retirement and estate planning strategies and may push individuals towards alternative wealth structures such as discretionary trusts or family investment companies.
Mandatory payrolling of benefits-in-kind from April 2027
Employers will be required to process all benefits-in-kind (BIKs) through payroll, including company cars, private medical insurance, and other taxable benefits. This replaces the traditional P11D system entirely and will require payroll software upgrades and new internal processes.
Making Tax Digital (MTD) for Income Tax – April 2026 rollout
MTD for ITSA will apply from April 2026 for landlords and sole traders with incomes above £50,000, expanding to those earning over £30,000 from 2027. Quarterly updates, digital records, and compatible software will become mandatory. More guidance is available via HMRC’s official MTD for Income Tax Guide.
Together, these pre-announced measures already represent one of the most significant shifts in the UK’s tax landscape for many years. The new measures introduced in the Autumn Budget build on this direction of travel – with a clear emphasis on revenue raising, compliance tightening, and long-term structural reform.
However, there will be no late submission penalties for any quarterly updates during the entire 2026/27 tax year. This provides a “soft landing” period to help businesses adjust to the new reporting requirements and ensure they have the right digital record-keeping processes in place.
Key Tax Measures Announced in the Autumn Budget 2025
The Autumn Budget 2025 builds on an already substantial programme of fiscal reform, but the Chancellor introduced several new measures aimed at stabilising public finances while encouraging targeted economic growth. Below is a breakdown of the headline announcements affecting UK taxpayers, employers and business owners.
No increase to the main rates of Income Tax, National Insurance or VAT
The Chancellor reaffirmed the government’s commitment not to raise the headline rates of Income Tax, National Insurance contributions (NICs) or VAT during this parliament. While this offers short-term stability for individuals and businesses, the ongoing freeze of tax thresholds means the effective tax burden will still rise through fiscal drag. Employers should factor this into payroll cost modelling for the coming years.
Income tax thresholds frozen further until 2031
In addition to the existing freeze until 2028, all income tax thresholds will now remain unchanged for a further three years – up to April 2031. This extends fiscal drag deep into the next decade and is expected to bring several million additional taxpayers into higher-rate bands. Business owners, especially those extracting profits through salary and dividends, may need to revisit remuneration planning and explore tax-efficient strategies.
New road usage tax for electric and hybrid vehicles
From the 2028/29 tax year, electric vehicle (EV) drivers will face a new road pricing levy of 3p per mile, while hybrid vehicles will be charged 1.5p per mile. These rates will increase annually in line with inflation. This marks the government’s long-signalled shift towards replacing declining fuel duty revenues as more drivers switch to EVs. Businesses with electric fleets – particularly couriers, delivery firms and company car schemes – should begin modelling future transport costs now.
NICs applied to higher-value salary sacrifice pension contributions
From April 2029, the first £2,000 of salary-sacrificed pension contributions will remain exempt from National Insurance. However, any contributions above this threshold will attract both employer and employee NICs – at 15% and 8% for earnings up to £50,270, and an additional 2p per pound above that level. This represents a significant change to the long-standing tax efficiency of salary sacrifice arrangements. Employers may need to review reward packages and ensure staff are fully informed ahead of the change.
High-value property surcharge from April 2028
A new council tax surcharge will apply to residential properties valued at £2 million or more. The charge will be collected alongside standard council tax and applied on a banded basis:
- £2m–£2.5m: £2,500 per year
- £5m+ : £7,500 per year
This measure predominantly affects high-value homes in London and the South East, but it may also impact landlords and property investors holding premium assets through companies or trusts. Revaluations and professional valuations may be required to confirm banding.
Dividend tax increases from April 2026
The basic and higher dividend tax rates will rise by 2 percentage points, increasing to:
- 10.75% for basic-rate taxpayers
- 35.75% for higher-rate taxpayers
This change increases the cost of profit extraction for limited company directors and may prompt a shift in remuneration planning, particularly for those relying on a blend of salary and dividends. Companies with retained profits may also wish to explore distribution strategies ahead of April 2026.
ISA reforms from April 2027
The annual £20,000 ISA allowance will remain in place, but at least £8,000 must be allocated to investment ISAs (e.g. stocks and shares). Cash ISAs will effectively be capped at £12,000 per year. Individuals aged 65 and over will be exempt from this restriction. This shift aims to push long-term savers towards investment markets and reduce reliance on cash products during high inflation periods.
Fuel duty frozen until September 2026
Fuel duty will remain frozen until September 2026, with the temporary 5p per litre cut also preserved. After this point, the government intends to introduce staged increases. Transport-heavy businesses – from logistics firms to regional trades – should begin forecasting higher fuel costs beyond 2026.
Changes to capital allowances from April 2026
The main rate of Writing Down Allowances (WDA) will be reduced by 4%, bringing it down to 14%. To retain incentives for capital investment, a new 40% First-Year Allowance (FYA) will apply to main-rate assets from 1 January 2026. However, cars, second-hand assets, and assets intended for leasing overseas will not qualify. Businesses planning major asset purchases should consider timing carefully to maximise relief.
Reduced CGT relief on disposals to Employee Ownership Trusts
Capital Gains Tax advantages for transferring businesses into Employee Ownership Trusts (EOTs) will be restricted. This could slow the growing trend of EOT conversions and encourages early transactions ahead of the change.
Voluntary Class 2 NICs abolished for people living overseas
Individuals working abroad will no longer be permitted to pay voluntary Class 2 NICs, which previously allowed expatriates to build entitlement towards the UK State Pension at a low weekly rate.
Tax on savings income to rise by 2% from April 2027
All savings income tax bands will increase by two percentage points, impacting interest earned on savings accounts, bonds, peer-to-peer lending and certain investment products. This change will particularly affect higher-rate taxpayers amid rising interest rates.
New standalone tax rates for property income
From April 2027, property income will be taxed separately from other forms of personal income, with rates set at:
- 22% – Property basic rate
- 42% – Property higher rate
- 47% – Property additional rate
Finance cost relief for landlords – currently capped at 20% – will instead be provided at the new 22% property basic rate. This represents a meaningful shift for landlords and will increase liabilities for many portfolio landlords.
100% Agricultural and Business Property Relief transferable between spouses
These two major IHT reliefs will now be fully transferable on death between spouses, broadly aligning them with the transferable nil-rate band and easing succession planning for farms and family-owned businesses.
Permanently reduced business rates for hospitality
Hospitality premises will continue to benefit from reduced business rates, funded through increased taxation on large online warehouse operators. This measure aims to level the playing field between high-street hospitality businesses and online retail giants.
Abolition of low-value import relief from March 2029
The existing VAT relief on imported goods worth £135 or less will be removed. All low-value imports will attract VAT at the point of sale or import. This will likely increase costs for online retailers, marketplaces and consumers purchasing from overseas suppliers.
New settlement opportunity for loan charge cases
HMRC will offer a fresh settlement window for individuals affected by the long-running loan charge dispute, enabling taxpayers to resolve outstanding liabilities on more favourable terms. Details will be published in upcoming HMRC guidance.
Duties on tobacco, vaping and alcohol to rise with inflation
Standard uprating of excise duties will continue, maintaining pressure on the alcohol and tobacco sectors during inflationary conditions.
Higher taxes on remote gambling
Remote gambling operators will face higher duties, though in-person gambling duties remain unchanged. This primarily affects online casinos, betting apps and digital gaming platforms.
Bingo duty abolished
The long-standing bingo duty will be scrapped entirely in a bid to support bingo halls and community leisure venues.
Enterprise Management Incentive (EMI) scheme expanded
The EMI share option scheme will be made more generous, strengthening its position as a key tool for start-up and scale-up employee retention. Further detail on new thresholds and flexibility is expected in HMRC’s scheme update.
Student loan repayment threshold frozen
The student loan repayment threshold for Plan 5 and new-style loans will remain frozen at the 2026/27 level for three years, drawing more graduates into earlier repayment.
No more simple assessment tax bills for state pensioners
From 2027, individuals receiving only the basic or new State Pension will no longer receive small tax bills via HMRC’s “simple assessment” system. This removes accidental underpayments for pension-only recipients.
Help to Save made permanent
The Help to Save scheme – designed for low-income workers on Universal Credit or Working Tax Credit – will become a permanent fixture. Eligible savers will receive a 50% government bonus on savings made over four years, worth up to £1,200.
Together, these measures underline the government’s approach: maintaining headline tax stability while relying heavily on threshold freezes and indirect taxation to increase revenue. For many individuals and business owners, the real-world impact will be felt gradually but significantly over the next six years.
