Autumn Budget: November 2025

Following much conjecture in the press over the last couple of months, Labour’s Rachel Reeves presented her latest Budget on 27^th November 2025.

Many allowances remain as they are, although some are now frozen for longer, as detailed below. However, there are a number of changes that will come into effect from April 2026, whilst some will not come into effect until 2027 and beyond.

Here is a summary of the key points:

Dividend Tax

From 6^th April 2026, Tax on dividend income will increase by 2%:

• Basic rate taxpayers will increase from 8.75% to 10.75%
• Higher rate taxpayers will increase from 33.75% to 35.75%
• Additional rate will remain unchanged at 39.35%

Savings Income

 From 6^th April 2027, tax on savings will increase by 2%:

• Basic rate taxpayers will increase from 20% to 22%
• Higher rate taxpayers will increase from 40% to 42%
• Additional rate taxpayers will increase from 45% to 47%

Property Income

From 6^th April 2027, property income will have it own individual tax rate:

• Basic rate – 22%
• Higher rate – 42%
• Additional rate – 47%

However, Scotland and Wales will have the ability to set property income rates in line with their current income tax powers, therefore, there may be changes to the above, depending on where you reside.  The Scottish Budget is expected on 13^th January 2026.

Salary Sacrifice & Pension Contributions

From April 2029, any salary sacrificed pension contributions above £2,000 will be subject to both employer and employee National Insurance Contributions (NICs).  Pension contributions continue to benefit from tax relief up to available allowances.

Inheritance Tax (IHT)

The current thresholds of £325,000 (Nil Rate Band) and £175,000 (Residence Nil Rate Band) were frozen until 2030 – this has now been extended a further year to 5^th April 2031 (ie the end of the 2030-31 tax year).

No changes were announced to the IHT gifting exemptions, including the ability to make regular gifts from income.

Agricultural Property Relief and Business Property Relief

From 6^th April 2026, only the first £1 million will get 100% relief on the combined value of agricultural and business property. For qualifying assets over £1 million, relief will be given at 50%, resulting in an effective rate of 20%.

On a positive note, it has been confirmed that any unused allowance will be transferrable between spouses and civil partners, including if the first death was before 6^th April 2026.

Shares quoted on certain recognised stock exchanges, such as AIM, have been eligible for 100% relief once they have been owned for 2 years, provided the company is a qualifying business.  From 6^th April 2026 this relief will be restricted to 50% for any such shares, regardless of value, resulting in an effective rate of 20%.

Pensions and Inheritance Tax (IHT)

From 6^th April 2027, most pension death benefits will be included in an estate for IHT purposes.  This was announced in November 2024 and this budget confirms the government plan to continue with this new legislation.

As of now, the tax position and IHT efficiency of pensions remains the same – until 2027, therefore, as things stand, there are no immediate changes.

Individual Savings Accounts (ISAs)

From 6^th April 2027, the annual cash limit will be set at £12,000, within the overall annual limit of £20,000. The exception will be for those aged 65 and over, who will retain the full £20,000 for cash ISAs.

Overall, ISA limits remain as they are until 5th April 2031: £20,000 for adults, £4,000 for Lifetime ISAs and £9,000 for juniors.

Lifetime ISA (LISA)

A new consultation will be issued in early 2026 on the introduction of a new, simpler ISA product to support first-time home buyers. This new product will replace the Lifetime ISA (LISA).

Business Asset Disposal Relief (BADR)

The rate of CGT will increase as planned from 6^th April 2026 to 18%, on business disposals up to £1 million.  Anything above this £1,000,000 will be taxed at 18% or 24%. Note that this £1,000,000 is a lifetime limit.

 Others

A couple of other points to note:

• Income tax and National Insurance thresholds will remain frozen until 5^th April 2031 (i.e., the end of the 2030/31 tax year).
• Capital Gains Tax remains unchanged: The CGT allowance now sits at £3,000 per annum, per individual. The tax rates for capital gains above this allowance: 18% for basic rate taxpayers and 24% for higher rate and additional rate taxpayers
• The State Pension will increase by 4.8% – the New State Pension will increase to £241.30 a week from 6^th April 2026 and the Basic State Pension will increase to £184.90 a week.
• The government plans to ensure that from 2027/28, those whose sole income is the state pension do not have to pay small amounts of income tax as the state pension continues to rise each year.
• There are no changes to Corporation Tax.
• High Value Council Tax Surcharge – new charge on owners of residential property in England worth £2 million or more, starting in 2028-29.

As always, we are here to guide you through how these changes may affect you and your wider Financial Planning, please contact Val or Claire, to discuss further.