Autumn Budget 2025 – What it means for our clients

The Chancellor’s Autumn Budget on 26 November 2025 set out one of the most significant tax reshapes in over a decade. A lot of the headline numbers (income tax rates, main corporation tax rate, VAT) remain the same, but the detail tells a different story.

For many of our clients, founders, business owners, landlords, creatives, investors and high-earning professionals, the changes are less about new taxes and more about freezes, stealth increases and tightening of reliefs.

Below is a focused run-through of the main measures likely to affect BAND clients, and some early thoughts on planning.

1. Personal Tax: Frozen Thresholds & Higher Investment Income Rates

Threshold freezes extended to 2031

Income tax and National Insurance thresholds for employees and the self-employed will now stay at current levels from April 2028 to April 2031. Employer NIC thresholds are also frozen over the same period. Because earnings and profits tend to rise over time, more income is dragged into higher bands (“fiscal drag”). In practice, this will:

• Pull more people into the higher and additional rates, and
• Increase effective tax bills without headline rate rises.

Higher tax on dividends, savings and property income

From April 2026 / April 2027, the government is targeting investment income:

Dividends (from April 2026)

• Basic rate: 10.75% (up from 8.75%)
• Higher rate: 35.75% (up from 33.75%)
• Additional rate: unchanged at 39.35%

Savings income (from April 2027)

• Basic rate: 22%
• Higher rate: 42%
• Additional rate: 47%

Property income new standalone rates (from April 2027)

• Property basic rate: 22%
• Property higher rate: 42%
• Property additional rate: 47%
• Finance cost relief (for landlords) will now be given at the property basic rate of 22%.

For clients with significant rental portfolios, investment portfolios or owner-managed company dividends, this is a clear nudge towards earlier planning, including the use of companies, pensions and ISAs where appropriate.

Ordering of reliefs

From 6 April 2027, personal reliefs and allowances that sit at steps 2 and 3 of the income tax calculation will be set off first against non-savings income (e.g. employment, trading), and only then against savings, property and dividends.

This will make it harder to shelter investment income using reliefs and can increase the effective rate on those sources.

2. Everyday Finances: EV Mileage, Child Benefit & Minimum Wage

New mileage tax on electric vehicles (from April 2028)

A new per-mile road charge is being introduced:

• Battery electric cars: £0.03 per mile
• Plug-in hybrids: £0.015 per mile

Rates will increase annually with CPI. For high-mileage users (including sales teams and business owners who run EVs personally), this becomes a real cost to factor into remuneration and company-car decisions.

Two-child benefit cap lifted (from April 2026)

The two-child limit within Universal Credit will be removed. This will be relevant for clients with families who receive UC or whose employees rely on it as part of their household income.

Minimum Wage increases (April 2026)

• 21and over (National Living Wage): £12.71
• 18–20: £10.85
• 16–17 and apprentices: £8.00

For employers in hospitality, creative industries, retail and care, payroll budgets will need updating well in advance.

3. Property & Wealth: Mansion Tax, Landlords & IHT Reform

New “mansion tax” council tax surcharge

From an as-yet unconfirmed start date, a new high-value council tax surcharge will apply:

• Properties valued over £2m: £2,500 per year
• Properties over £5m: £7,500 per year

The charge will be levied on owners and collected alongside council tax. London and South-East homeowners and property investors will be particularly affected.

Property income – higher rates and restricted relief

As noted above, property income is being moved to its own higher banded rates, and finance cost relief will only be given at 22%.

This will matter for:

• Higher-rate and additional-rate landlords
• Individuals with leveraged portfolios (e.g. BTL with significant mortgage interest).

The gap between holding property personally vs via companies will widen for many.

Inheritance Tax: thresholds, reliefs and trusts

Key changes include:

• IHT thresholds (nil-rate band and residence nil-rate band) frozen until April 2031.
• The new combined £1m allowance for 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) will be:
  • Transferable between spouses/civil partners, even if the first death was before 6 April 2026; and
  • Fixed at £1m until 5 April 2031.
• Anti-avoidance:
  • UK agricultural property held via non-UK entities will be treated as UK-situated.
  • Certain trust exit-charge and charity-exemption loopholes will be closed.
• Trust charges cap: relevant property trust charges for historic excluded property trusts will be capped at £5m from 6 April 2025.
• Pensions and IHT: from 6 April 2027, personal representatives can direct scheme administrators to withhold up to 50% of taxable death benefits for up to 15 months to pay IHT. PRs will be discharged from IHT on pensions discovered after HMRC clearance.

For families with trusts, farms, trading companies and complex estates, these changes reinforce the need to review wills, trust structures and succession planning ahead of the new dates.

4. Business & Corporate Tax: Capital Allowances, EVs & VAT

Capital allowances – 40% FYA and lower WDAs

From 1 January 2026:

• A new 40% First Year Allowance (FYA) will apply for most main-rate capital expenditure, including leased assets and unincorporated businesses.

From 1 April 2026 (CT) / 6 April 2026 (IT):

• Main rate Writing-Down Allowances reduce from 18% to 14%.

This tilts relief towards earlier years, but reduces the ongoing annual deduction. Timing of major asset purchases will become even more important for cash-flow and effective tax rate planning.

EV infrastructure & company car tax

• 100% business rates relief for eligible EV charging points and EV-only forecourts for 10 years.
• 100% first-year allowances for zero-emission cars and chargepoints extended to 2027.
• A temporary benefit-in-kind easement will prevent plug-in hybrid electric vehicle (PHEV) BIK charges from jumping too sharply between 2025–2028.
• Bringing certain employee car ownership schemes (ECOS) fully into BIK rules is delayed to 6 April 2030, with transitional arrangements through April 2031.

For businesses considering EV fleets, charging infrastructure or EV-focused forecourts, the tax environment remains broadly supportive.

Cross-border VAT grouping

From 26 November 2025, the UK will revert to unconditional “whole entity” cross-border VAT grouping. This matters for groups with UK and overseas establishments and could reduce internal VAT friction, but may also require careful review of partial exemption and place-of-supply positions.

Gambling, tourist taxes and other indirect measures

• Remote Gaming Duty increases from 21% to 40%, and Online Betting Duty from 15% to 25%, from April 2026.
• Bingo duty will be abolished from April 2026.
• Mayors in England will gain powers to introduce local tourist levies on overnight stays, affecting hotels, serviced apartments and short-stay operators.
• Fuel duty remains frozen at current levels until September 2026.

5. Entrepreneurs, EMI, EIS/VCT & Employee Ownership

EMI expansion (from April 2026)

The Enterprise Management Incentive (EMI) scheme is significantly broadened:

• Employee limit: up to 500 employees
• Gross assets: up to £120m
• Company share option limit: up to £6m
• Maximum holding period extended to 15 years, including existing options.
• EMI notification requirement to be removed from April 2027.

This is good news for high-growth and scaling businesses who want to use EMI to attract and retain key staff.

EIS and VCT changes

From April 2026:

• Company investment limit:
  • Up to £10m, or £20m for Knowledge Intensive Companies (KICs).
• Lifetime investment limit:
  • Up to £24m, or £40m for KICs.
• VCT income tax relief reduces to 20%.
• Gross assets thresholds increase to £30m pre-issue and £35m post-issue.

The direction of travel is clear: more headroom for companies, but slightly less upfront relief for individual VCT investors.

Employee Ownership Trust (EOT) CGT relief reduced

The current 100% CGT relief on qualifying disposals to EOTs is being cut to 50% of the gain. EOTs will remain attractive for cultural and succession reasons, but the headline tax benefit for exiting owners is materially reduced, particularly for higher-value exits. Any business considering an EOT route should revisit timescales and the commercial case.

Incorporation relief

For transfers of businesses to companies on or after 6 April 2026, incorporation relief will no longer apply automatically. Instead, it must be actively claimed.

This introduces an additional planning point – and also creates flexibility where clients may prefer not to claim relief, for example to re-base assets or manage future gains.

6. Savings, ISAs and Pensions

ISA and Lifetime ISA reform

From 6 April 2027:

• The annual cash ISA limit will be £12,000, within an unchanged overall ISA limit of £20,000.
• Over-65s will still be able to hold £20,000 entirely in cash ISAs.
• Starting rate for savings remains at £5,000, frozen to 5 April 2031.

The government will also consult in early 2026 on a new ISA product for first-time buyers, which will eventually replace the existing Lifetime ISA.

Salary sacrifice

From April 2029, the NI exemption for salary-sacrificed pension contributions will be capped:

• The first £2,000 per year of salary-sacrificed contributions remains exempt from employee NI.
• Contributions above this will be treated like normal employee contributions for NI.

For higher earners and employers who rely heavily on salary sacrifice to boost net pension funding, there is a medium-term window to review reward structures, bonus sacrifice and pension strategy.

Voluntary NICs abroad

From 6 April 2026:

• Access to pay voluntary Class 2 NICs while abroad will be removed.
• Minimum residency/contribution history to pay voluntary NICs outside the UK increases to 10 years.
• A broader review of voluntary NICs will follow.

This is particularly relevant for expats, internationally mobile professionals and global nomads who rely on voluntary NICs to secure UK State Pension entitlement.

7. What Should Clients Be Thinking About Now?

While many of the measures start from 2026 onwards, the lead time is short in planning terms.

Key actions to consider:

• High-earning individuals & investors
  • Review use of ISAs, pensions and company structures ahead of higher dividend/savings/property rates.
  • Consider the timing of large disposals, dividends and property transactions before rate changes take effect.
• Landlords & property investors
  • Model the impact of higher property income rates and 22% finance cost relief.
  • Re-assess personal vs corporate ownership, especially for geared portfolios.
  • Factor in the mansion tax and local tourist levies for high-value or short-stay properties.
• Business owners, founders & creatives
  • Make use of the enhanced EMI limits and longer horizons to lock in key talent.
  • Review capital expenditure plans in light of the 40% FYA and reduced WDAs.
  • If exploring an EOT, revisit the valuation, timing and structure given the halving of CGT relief.
• Families, trusts & estates
  • Revisit wills, trusts and family company structures for the new APR/BPR allowances, trust caps and IHT anti-avoidance rules.
  • Consider how frozen thresholds to 2031 change long-term IHT exposure.

If you’d like to understand how these changes affect you, your family or your business, please get in touch with your usual BAND contact or email us and we’ll be happy to talk through the detail in the context of your plans.