Autumn Budget 2025

The Chancellor has announced her latest measures to balance the books…….one milkshake at a time!

As well as increasing the tax on the milky sweet treats the Chancellor is introducing an array of measures to gather in extra money to fill the financial “black hole”, fund additional financial commitments, including £370m to the NI Executive, and subsidise the extra cost of scrapping the 2 child benefit cap. We take a brief look at the main headlines below:

Income Tax

• An additional 2% of tax will be added to income from dividends from April 2026 and to savings and property income from April 2027.
• Personal Tax Thresholds will remain frozen for a further 3 years until 2030/2031 pushing more tax payers into basic and higher tax bands.
• An increase in the minimum wage to £12.71 (increase of 50p) for those over 21 years old and £10.85 (increase of 85p) for those aged 18 – 20 will be good news for workers but combined with the frozen tax free allowance will see an increase in tax paid.

Savings

• It was anticipated that the ISA savings allowance would be hit but the restriction is not as severe as initially expected. The annual allowance will remain at £20,000 but the cash allowance will be restricted to £12,000 with the remaining £8,000 reserved for investment. Those aged over 65 years old will retain the full £20,000 cash allowance.
• The Help to Save scheme which was due to end is to be made permanent to help those on low incomes put money aside for themselves.

Pensions

• New measures to be introduced from April 2029 will see a £2,000 cap on the amount of pension contributions which an employee can make through a salary sacrifice scheme. Any additional contributions through a salary sacrifice arrangement will be subject to NIC.
• There is no change to the annual amount which can be invested into a pension, currently £60,000, or the tax free 25% lump sum.

Inheritance Tax

• As announced in the previous budget the IHT threshold will remain frozen until 2030.
• There has been no change regarding the previous £1m limit for Agricultural Property Relief and Business Property relief but the unused allowance will now be transferable between spouses.
• Plans to include pension savings for IHT from April 2027 remain unchanged.

Businesses

• The main rate of written down allowance (WDA) will reduce from 18% to 14% in April 2026. This will see a decrease in the annual tax deduction for capital expenditure on which full allowances cannot be claimed in the year of purchase.
• A new 40% First Year Allowance (FYA) will be available to both incorporated and unincorporated businesses from 1 January 2026.
• The employer NIC secondary threshold (the level at which employers start to pay ER NIC) has been frozen until 2030/2031. The increase in minimum wage and frozen tax bands will see an increase in ER NIC.

Electric Vehicles

• Drivers of electric and plug in hybrid vehicles will be hit by new road pricing charges based on the number of miles driven from April 2028.

High Value Property Charge

• Homes situated in England with a value in excess of £2m will incur a high value council tax surcharge.