Budget 2025: What are the Main Changes to Tax in the UK?
Following weeks of speculation, Chancellor of the Exchequer, Rachel Reeves, presented the Autumn Budget to the UK parliament on 26 November. In this article, we summarise some of the key changes to tax in the UK to follow the recent Budget announcement.
Which taxes are changing following the Budget?
Tax on High Value Properties: A new ‘mansion tax’ has been introduced for owners of properties worth £2 million and above. There will be four rate bands ranging from £2,500 due annually for properties valued at £2-2.5m, up to £7,500 annually for properties valued at over £5m.
Capital Gains Tax relief cut for Employee Ownership Trusts: The Capital Gains Tax relief rate for business disposal to Employee Ownership Trusts will be reduced from 100% to 50%.
Salary sacrifice pension contributions: National Insurance will be payable on salary sacrifice pension contributions above an annual threshold of £2,000 from April 2025.
Dividends Tax: From April 2027, the basic and higher rates of dividends tax will rise by 2% to 10.75% and 35.75%, respectively.
Tax on Property & Savings Income: The rate of tax charged on income from property and savings will increase by 2% from April 2027.
Limits on Cash ISAs: The maximum amount of money that can be saved into a Cash ISA annually will be reduced from £20,000 to £12,000 from April 2027, however over 65s are exempt from this new rule. The full ISA limit of £20,000 remains, however, to avail of the full allowance, £8000 must be placed in other types of ISAs (e.g. Stocks and Shares ISA).
Which taxes are remaining the same?
Income Tax & National Insurance: National Insurance and Income Tax rates will remain the same with current thresholds being frozen until April 2031. There have also been no changes announced to VAT.
Inheritance Tax: Inheritance Tax thresholds will be frozen at the current rates until 2031. However, 100% of Agricultural Property Relief (APR) and Business Property Relief (BPR) (up to £1 million) will now be transferrable between spouses.
How we can help
If you have any questions about recent or upcoming changes to tax rules in the UK, please contact our Tax Director, Liam Coulter, for a confidential discussion.
This article is intended to be a summary of some of the key changes to taxation in the UK announced in the Autumn 2025 Budget. Please consult gov.uk for full information on current and future tax regulations in the UK.