Autumn Budget 2025: What Actually Happened (and What It Means for You)

It’s been quite the build-up to this year’s Budget, hasn’t it? Plenty of speculation, a few U-turns before anything was even announced, and then the OBR went and leaked the headlines before the Chancellor even got to her feet. Not quite the grand reveal Rachel Reeves was probably hoping for!

We were told there was a big hole in the country’s finances that needed filling. The big question was: would Labour break their manifesto promise and increase NIC, VAT, or income tax? Or would they go for a mix of smaller, more targeted taxes instead?

We’ve pulled together the key tax changes announced in the Autumn Budget 2025 so you can see what’s changing and how it might affect you or your business.

National Living Wage

• From April 2026, the National Living Wage for workers aged 21 and over is going up to £12.71 per hour. Younger workers aged 18 to 20 will also see their minimum wage increase significantly.
• If you run a business that relies on a larger team – like hospitality, retail, or care services – this is going to mean higher wage costs. It’s worth taking some time now to look at your payroll and budget so you’re prepared when these changes kick in.
• Not sure how this will impact your business? Give us a call, reply to this email – we can help you work through the numbers and plan ahead.

Income Tax and National Insurance Changes

• Tax thresholds frozen again: Personal tax and employer NIC thresholds will stay frozen for another 3 years. With wages rising, this is a continuation of the “stealth tax” we’ve been seeing since 2021-22.
• Pension salary sacrifice changes: From April 2029, NIC relief on salary-sacrificed pension contributions will be capped at the first £2,000.
• Non-earned income tax rising by 2%: This affects dividends from April 2026 and rental and interest income from April 2027. Interestingly, higher and additional rate taxpayers might actually be slightly better off than if income tax had been increased across the board.
• Cash ISA cap for under-65s: From April 2027, if you’re under 65, your cash ISA allowance will be capped at £12,000. You can still invest up to £20,000 tax-free, but £8,000 will need to go into stocks and shares ISAs. If you’re over 65, nothing changes.
• EIS and VCT reforms: Companies will still qualify beyond the startup phase, but first-year relief for VCT investment drops from 30% to 20%.

Pensions

• Good news: The 25% tax-free lump sum hasn’t changed.
• State Pension increase: The State Pension will go up by 4.8% from April 2026. If your only income is the State Pension, you won’t have to pay small amounts of income tax even though the pension now exceeds the personal allowance (though we’re still waiting to hear how this will work in practice).
  

Non-Residents

• Overseas individuals: The ability to pay into a UK State Pension at Class 2 NIC rates will be scrapped. To receive a UK State Pension, you’ll now need to have paid in for at least 10 years whilst UK tax-resident. More changes are expected.
• Temporary non-residence rules: From April 2026, dividends paid from post-departure profits will also be taxed if you return to the UK.

Inheritance Tax

• Rates and thresholds unchanged: The £325,000 threshold stays frozen until at least 2030 – that’s 20 years without an increase. Another stealth tax.
• APR and BPR changes: From April 2026, 100% relief will only apply to the first £1 million, with 50% relief on anything above that. The good news? The £1 million allowance will be transferable between spouses. The bad news? It won’t increase with inflation and is now fixed until April 2031.
• Infected Blood Compensation Scheme: Receipts will be IHT-free if the original recipient has died before payment. Living recipients have two years to gift the payment without IHT exposure.

VAT

• No changes: VAT rates and thresholds remain the same.

Corporate Taxes

• Corporation tax unchanged: Rates and thresholds stay as they are.
• Capital expenditure: Full expensing still applies for most spending. However, for non-qualifying expenditure, a new 40% first-year writing down allowance starts in January 2026. The trade-off? The main pool writing down allowance rate drops from 18% to 14% from April 2026.

Capital Gains Tax

• No changes this year: Rates and thresholds remain the same, though the previously announced increase to 18% on BADR qualifying assets still goes ahead in April 2026. Carried interest will be taxed as income at 75% of the usual rate.
• EOT share sales: With immediate effect, selling shares to Employee Ownership Trusts will only get 50% CGT relief, down from 100%. This will disappoint a lot of people.

Other Changes

• “Sugar Tax” extended: Now covers bottled and canned milky drinks.
• Remote Gaming Duty increase: From April 2026, this goes up from 21% to 40%. Online betting duty rises from 15% to 25%. Bingo Duty is abolished, and in-person gambling taxes stay the same.
• “Mansion Tax”: From 2028, properties worth £2 million to £5 million will pay £2,500 per year, and those over £5 million will pay £7,500 per year. This will be collected with the council tax.
• EV excise duty: From April 2028, electric car drivers will pay 3p per mile, and hybrid drivers will pay 1.5p per mile.
• Fuel duty cut extended: The 5p fuel duty cut that was due to end in April 2026 is now extended until September 2026.

What Didn’t Happen?

A lot was rumoured ahead of the Autumn Budget 2025, but these didn’t make the cut:

• LLP taxation reform: No changes to how LLP members pay NIC.
• Wealth tax: Not as such, but the “Mansion Tax” targets a similar group.
• Exit tax: No exit tax for those leaving the UK – a relief for many who were considering an earlier departure!

What Does This All Mean for You?

There’s a lot to take in, and some of these changes might affect you, your business, or your financial plans. If you’re not sure how any of this impacts you, or if you’d like to chat through what you should be doing to prepare, just get in touch.

We’re here to help you make sense of it all – no jargon, no judgements, just clear advice.

Give us a call or drop us an email, and let’s have a chat.