Headlines from the 2025 Autumn Budget

2025’s Autumn Budget was announced on Wednesday 26 November by the Chancellor of the Exchequer, Rachel Reeves.

The Autumn Budget’s been the main talking point across various industries recently with speculation of sweeping tax rises. Putting the Chancellor on the back-foot, this year saw the Office for Budget Responsibility (OBR) accidentally releasing the economic forecast before the Budget was announced.

Our TC Group team have summarised the key headlines, focusing on the tax changes and policy updates that most likely impact you, your business, and your employees.

In this blog we cover:

• Income tax rate changes
• Income tax thresholds
• Pensions
• Electric vehicles
• National living wage and minimum wage increases
• ISAs
• Residential property
• Capital Allowances and corporation tax
• Employee Ownership Trusts and Capital Gains Tax
• Business property
• Tax Avoidance and loan charge settlement
• Sugar tax
• Apprenticeships
• IHT

 

Income Tax Rate Changes

From April 2026

• The ordinary rate and upper rate of tax on dividends will increase by 2%. The additional rate of tax on dividends will remain unchanged.
• The new rates will be 10.75%, 35.75% and 39.35%.

From April 2027

• Tax on savings income and rental profits will increase by 2% for the basic, higher and additional rates.
• The new rates will 22%, 42% and 47%.

The relief available against rental profits for finance costs will also be raised to 22%.

 

Income Tax Thresholds

Income tax thresholds will be frozen for a further three years from 2028.

The freeze is estimated to lead to four million more people paying income tax, is dragging three million more people into the higher rate band.

 

Pensions

Salary-sacrificed pension contributions above a £2,000 (per annum) cap will be subject to Employee & Employer National Insurance Contributions from 6 April 2029.

This will impact employees making 5% pension contributions through salary sacrifice who earn £40,000 or more before salary sacrifice.

For an employee on £50,000 per annum and contributing 5%, the employee National Insurance cost will increase by £40. £50,000×5%= £2,500. From that £2,500, that person’s gone over the £2,000 pension allowance and is therefore liable to pay £500 x8% NIC and for employers by £75 (£500×15%).

 

Electric vehicles

From April 2028, electric vehicle (EV) drivers will be required to pay a road charge of 3p per mile, or 1.5p per mile for plug-in hybrids.

For example, a full electric vehicle driving 8,500 miles per year in 2028/29 will pay £255.

The introduction is expected to bring in £1.1 billion in 2028/29, increasing to £1.9 billion by 2030/31.

 

National Living Wage and National Minimum Wage increases

From 1 April 2026, the national living wage for workers aged 21 and over will increase by 4.1%, rising from £12.21 to £12.71 per hour. This is equivalent to approximately £900 more per year for a full-time employee.

Minimum wage for those aged 18 to 20 will rise by 8.5%, increasing from £10.00 to £10.85 per hour, which represents around £1,500 extra per year for someone working full-time.

For 16 and 17-year-olds, as well as apprentices, the minimum wage will increase by 6%, from £7.55 to £8.00 per hour.

 

ISAs

The full £20,000 ISA allowance will remain, however from 2027 you’ll be required to designate £8,000 exclusively for stocks and shares, meaning only £12,000 can be saved in a cash ISA.

The Chancellor said: “If you had paid £1,000 a year since 1999 in stock and shares instead of cash, you’d be circa £50,000 better off”.

For over 65s, the full cash allowance of £20,000 will remain.

 

Residential Property

A Council Tax Surcharge on high-value properties will be introduced from April 2028.

This will be an annual charge of:

• £2,500 for properties worth between £2 – £2.5 million
• £3,500 for properties worth between £2.5 – £3.5 million
• £5,000 for properties worth between £3.5 – £5 million
• £7,500 for properties worth more than £5 million

Homeowners, not occupiers, will be liable for the charge.

 

Capital Allowances and Corporation Tax

From 1 April 2026, writing down allowance on the main pool is reducing from 18% to 14% per year.

The Government has introduced a new first-year allowance (FYA) of 40% for main rate expenditure. This is to encourage investment in assets such as those bought for leasing and by unincorporated businesses.

First year 100% allowances for new zero emission vehicles (ZEVs) and charge points are being extended for a further year until 31 March 2027 for corporation tax purposes, and 5 April 2027 for income tax purposes.

The £1 million annual investment allowance and full Expensing continues to be fully available for qualifying expenditure.

The Government will now double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026.

The main rate Corporation tax rate will remain at 25%.

 

Employee Ownership Trusts and Capital Gains Tax

Current Capital Gains Tax (CGT) relief available on qualifying disposals to Employee Ownership Trusts (EOT) enables owners to sell their shares without paying any CGT.

Effective from 26 November 2025, the relief available on EOT sales has been immediately reduced from 100% to 50%.

Whilst there remains a tax incentive for owners to sell to an EOT, in conjunction with the increase of the disqualification period to four full tax years following the year of disposal (introduced in the Autumn 2024 Statement), this measure will further encourage owners to fully explore their succession options prior to embarking on this particular exit route.

 

Business Property

Film studios: a one year extension to 40% business rates relief for film studios.

Permanent lower business rates tax rates for over 750,000 retail, hospitality and leisure properties, worth nearly £900m a year from April 2026.

 

Tax avoidance and Loan Charge Settlement

New powers will be introduced for HMRC to pursue promoters of tax avoidance schemes.

Promoters not allowed to provide further tax services

For loan enquiries there will be a proposed new settlement opportunity along with a suspension of part of liability and time to pay

 

Sugar Tax

Milk-based drinks will be included in the soft drinks industry levy – “sugar tax” – from 2028.

This will apply to pre-packaged milk-based drinks with added sugar, such as bottled milkshakes and cold coffee drinks.

It will also cover milk substitutes such as soya, oat and rice milks with added sugar.

The levy already applies to most sugary and fizzy soft drinks sold in cans, bottles and cartons in supermarkets.

 

Apprenticeships

The Government is allocating £725 million to the Growth and Skills Levy to support apprenticeships for young people, including a commitment to fully fund SME apprenticeships for eligible individuals under the age of 25.

In 2024, the Conservative government removed the 5% co-investment requirement for SMEs hiring apprentices under 22, and today Reeves announced plans to extend this relief to apprentices aged 22 to 24.

 

Inheritance Tax: Transfer of Unused Agricultural and Business Property Relief

The 2024 Budget introduced the £1 million cap on the 100% relief for APR/BPR per estate starting 6 April 2026.

Any unused portion of the £1 million allowance for the 100% rate of Agricultural Property Relief (APR) and Business Property Relief (BPR) will be transferable to surviving spouses and civil partners, even if the first death occurred before 6 April 2026.

This measure will take effect from 6 April 2026.

 

BEFORE YOU MAKE A CHANGE

The information in this blog is for general guidance only, and should not be taken as personalised advice.

We recommend speaking to one of our advisors for tailored support based on your individual circumstances.

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