Autumn Budget 2025 – What Businesses and Individuals Need to Know

The Chancellor delivered the Autumn Budget 2025 against a backdrop of slow economic growth, high inflation pressures and a commitment to long-term fiscal stability. While headline tax rates remain largely unchanged, the government has introduced a series of measures that significantly affect households, investors, and businesses over the coming years.

Below is a clear breakdown of the key announcements and what they mean in practice.

 
1. A Recap of Previously Announced Major Changes

Before looking at the new measures, the government reaffirmed several important policies already set in motion:

Corporation Tax capped at 25% for the duration of this parliament.
Income tax thresholds frozen until 2028, contributing to the highest overall tax burden in 70 years (expected to reach 38.3% of GDP by 2031).
Inheritance Tax (IHT) thresholds frozen until 2030.
CGT Business Asset Disposal Relief rate to rise from 14% to 18% in April 2026.
100% IHT Agricultural/Business Property Relief (APR/BPR) capped at £1m from April 2026.
Pension pots to be brought into IHT from April 2027.
Mandatory payrolling of benefits in kind from April 2027.
Making Tax Digital for Income Tax goes live from April 2026.

These measures set the backdrop for today’s 2025 Budget announcements.

 
2. Key Tax Announcements

Income Tax & Personal Measures
No increases to the core rates of income tax, national insurance, or VAT.
However, income tax thresholds are frozen further—from 2028 to 2031.
Effect: More people will be dragged into higher tax bands as wages rise.
Property, savings and dividend tax rates each increase by 2% from 2026.
Dividend tax specifically rises to 10.75% (basic) and 35.75% (higher rate).
From 2027, the ISA allowance remains at £20,000, but at least £8,000 must be invested rather than held in cash (over-65s are exempt).
Student loan repayment threshold frozen at 2026/27 levels for three years.

Employer & Employment Taxes
From April 2029, salary-sacrificed pension contributions above £2,000 per year will attract National Insurance:

15% employer NIC
8% employee NIC (2% above £50,270)
This is a major change affecting salary sacrifice schemes and employer planning.
Property-Related Taxes

High-value property surcharge from April 2028:

Properties £2m–£2.5m: extra £2,500 per year
£5m+: £7,500 yearly surcharge
Reduction in CGT relief on disposals to employee ownership trusts.
Council tax banding reforms continue for high-value homes.

Business Taxes
Writing-down allowances for capital expenditure reduced.
No changes to main corporation tax rate (remains 25%).
EMI share scheme to be made more generous.
Permanent reduction of business rates for hospitality, funded by increased charges on online warehousing.
Customs duty now applies to parcels of any value—removal of low-value exemption.

Motoring & Environmental Taxes
Electric vehicle road charging from 2028/29:

3p per mile for EVs
1.5p per mile for hybrids
Charge rises annually with inflation.
Soft drinks levy extended to high-sugar milk-based drinks.
Fuel duty frozen until September 2026, with staged increases afterwards.
Tobacco, alcohol and vaping duties will rise with inflation.
Abolition of "bing duty" (as announced).

Inheritance Tax Changes
100% APR/BPR relief becomes transferrable between spouses, giving families more flexibility in estate planning.
Inherited blood compensation payments will be IHT-free.
 
3. Public Spending and Support Measures

Households & Welfare
The two-child benefit cap will be lifted from April 2026.
State pension increases again under the triple lock, aligning with wage growth.
An average £150 reduction in energy bills next year, due to removal of green levies.
Public Services
Extra funding for:

Devolved governments
Tax fraud and benefits fraud prevention
Sanctions enforcement (particularly Russian assets)
Other Major Points
National debt will exceed £3 trillion for the first time.
Rail fares are frozen once again.
A new tourist tax will apply to overnight stays, expected to fund local services.
 
4. What Does This Budget Mean?

Stealth taxation continues: Despite no rate rises, frozen thresholds and increased duties will raise revenue.
High-value property owners will shoulder additional tax burdens.
Businesses face mixed outcomes—some support through business rates and EMI expansion, but reduced capital allowances and other tightening elsewhere.
Investors and pension savers need to reassess strategies as ISA rules, dividend tax and pension-related IHT evolve.
Electric vehicle owners now face future road charges previously avoided.
 
5. Final Thoughts

The Autumn Budget 2025 reflects a clear government priority: stabilising the public finances while avoiding headline tax rises. However, the cumulative effect of frozen thresholds, new surcharges and reduced reliefs means that both individuals and businesses will see their tax liabilities increase over the coming years.

Careful planning—particularly around property ownership, pensions, remuneration strategies and investments—will be essential to mitigating these changes.