How the Autumn Budget 2025 affects your taxes and business

The Chancellor’s Autumn Budget 2025 (on 26 November) introduced a series of measures that may significantly affect both your personal and business tax position. Below is a summary — and what you should consider when you next review your affairs.

Personal tax (Self-Assessment individuals with: employment, dividends, rental, savings, foreign income, gains)

What changed:

• Income tax and National Insurance thresholds (personal allowance, higher-rate, additional-rate levels) are frozen until 5 April 2031. This means that as your earnings or income increase (e.g. via pay rises, inflation, rental growth), more of your income may be taxed at higher rates over time — even though rates themselves remain the same.

• Tax on dividend income increases from April 2026 by 2%: basic-rate becomes 10.75%, higher-rate 35.75%; additional-rate remains 39.35%.

• From April 2027, savings interest and rental/property income (and other “non-employment” income) tax rates rise by 2% — affecting amounts subject to tax after allowances and reliefs.

What we recommend for you:

• If you receive dividends, rental income, savings interest or other passive income (foreign or domestic), reassess the likely tax liability for 2026/27 and future years.

• If you usually make pension contributions via salary-sacrifice, be aware that from 2029 only the first £2,000 will be NIC-free — you might want to review pension planning now to see whether other approaches make sense.

• For those with foreign income or capital gains: with rising taxes on savings, property and dividends, it may be worth evaluating the timing of dividend distributions or disposals.

Business clients (UK limited companies, PAYE, VAT, Corporation Tax)

What changed:

• The main Corporation Tax rate remains capped at 25% for the current Parliament — no immediate increase.

• However, capital allowances and reliefs have been adjusted: the main writing-down allowance (WDA) rate for plant & machinery reduces from 18% to 14% from April 2026, though a new 40% first-year allowance (for lessors/unincorporated businesses) is introduced from January 2026.

• Changes to reliefs on investment schemes (for example, changes to reliefs for certain trusts, share-ownership schemes, and relevant allowances) may affect long-term planning.

What you should do:

• Review near-term capital expenditure plans: the change to writing-down allowances may impact the optimal timing for plant, machinery, or equipment purchases.

• If you use share-ownership schemes, trust-based arrangements, or are considering re-structuring, we should revisit these in light of the reduced tax reliefs.

• For dividend-heavy extraction strategies: with dividend tax rising in 2026, you may want to re-assess the balance between salary and dividends, and discuss alternative strategies (e.g. retained profits, pension contributions, timing of distributions).

Plan ahead now

Although headline income tax and Corporation Tax rates remain unaffected, “fiscal drag” and increased taxes on non-employment income mean many of you could face higher overall tax bills over time. For companies, changes to allowances and reliefs suggest a review of capital expenditure and extraction strategies is prudent.

If you’d like, we can run a budget-impact analysis for your 2025/26 and 2026/27 tax — both personally and for your company — to model likely changes and consider optimising tax positions under the new rules.