On 26th November, Rachel Reeves delivered the 2025 Autumn Budget, in which she announced changes to salary sacrifice on pension contributions, electric vehicles road tax and increases to the National Minimum Wage and Living Wage.
Here is a summary of the key tax changes announced in the Autumn Budget.
Personal taxes and pensions
- The freeze on National Insurance and Income Tax thresholds will remain in place until 2031.
- From April 2029, the pension amount that is exempt from National Insurance Contributions will be capped at £2,000 a year for employee contributions made through salary sacrifice.
- ISAs are being reformed: £8,000 of the £20,000 tax-free ISA allowance must be used for investments, capping the annual cash ISA allowance at £12,000 for those aged under 65.
- Tax rates on property and savings income will rise by 2% for basic, higher and additional rate taxpayers. The tax rates will therefore be 22%, 42% and 47%.
- The tax rate on dividend income will rise by 2% for basic and higher rate taxpayers (but not additional rate). The tax rates will therefore be 10.75%, 35.75% and 39.35%.
Business taxes
- A new 40% first year allowance will be available from January 2026 in addition to full expensing and the annual investment allowance for qualifying capital expenditure.
- The writing down allowance for the main pool capital allowances will be reduced from 18% to 14% from April 2026.
Wages
- National Living Wage will be increasing for over 21s to £12.71 per hour.
- The rate for 18- to 20-year-olds will be increased from £10.00 to £10.85 per hour.
- National Minimum Wage for apprentices has increased to £8.00 per hour.
Capital Gains Tax
- Capital Gains Tax (CGT) relief on business sales to Employee Ownership Trusts (EOTs) will be decreased from 100% to 50%.
Gambling
- Remote gaming duty will be increased from 21% to 40%.
- Duty on online betting will be increased from 15% to 25%.
Inheritance Tax
- Inheritance Tax (IHT) thresholds have been frozen until 2031.
- Payments from the infected blood scandal scheme will be exempt from IHT.
- There have been no changes to the government’s announcements in the previous statement regarding a new £1 million allowance for 100% business and agricultural property relief, other than the allowance now being transferable between spouses.
Fuel duty and electric vehicles
- 5p fuel duty cut remains in place until September 2026.
- From April 2028, electric vehicles will have a mileage tax of 3p per mile and 1.5p per mile for plug-in hybrid cars.
Property taxes
- The new ‘mansion tax’ will be introduced from April 2028 for properties worth over £2 million and will be collected alongside Council Tax.
- The annual charge will be £2,500 for properties worth over £2 million and £7,500 for properties worth over £5 million.
How will the Autumn Budget affect you?
Our tax and private client team are here to assist and advise you on the changes that will impact you and your business. Get in touch with a member of our team today to see how we can help.
You can also read a full comprehensive review of the tax changes announced during the Autumn Budget, download our full publication below.
