Autumn Budget 2025: summary and key announcements
Major changes were announced to property and dividend taxes, ISA allowances, pension contributions, council tax, inheritance tax (IHT) relief and more
Despite major reforms announced in last year’s Budget, including changes to capital gains tax and pension rules, the Chancellor continues to face pressure from the markets, the parliamentary Labour party and the electorate. With strong resistance to spending cuts, further tax rises have now been confirmed in the 2025 Autumn Budget.
From property and dividend taxes to ISA allowances, pension contributions, council tax and inheritance tax (IHT) relief, these changes will affect how you save, invest and plan for the future. We’re here to explain what’s changing, what it means for you, and the strategies you can use to plan for what’s next amidst shifting goalposts.
Tax and National Insurance (NI)
2% increase to income tax on dividends, savings income and property income while thresholds remain frozen
Tax rates on investment income are rising. From April 2026, dividend tax will increase by two percentage points for basic and higher rate taxpayers, with the basic rising from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. From April 2027, savings and property income will follow suit.
These changes will affect anyone with general investment portfolios, rental properties or significant savings outside tax wrappers. Planning ahead to maximise allowances and consider tax-efficient structures will be key.
Income tax thresholds remain frozen until 2031, continuing the trend of fiscal drag. As wages rise, more people will be pulled into higher tax bands, increasing overall tax bills. Reviewing your tax position and considering strategies such as pension contributions or charitable giving could help manage liabilities.
The State Pension triple lock remains in place, guaranteeing increases in line with the highest of inflation, earnings or 2.5%. The Chancellor confirmed that this will result in an increase of 4.8% for pensioners from 6 April 2026.
Inheritance tax (IHT) thresholds frozen for additional year
IHT thresholds will remain frozen for an additional year, to April 2031, meaning a growing number of estates will be liable for IHT as asset values rise. Early planning, including the use of allowances and reliefs, will be vital to manage future liabilities.
Agricultural and business relief for IHT now transferrable
Agricultural and business relief for IHT now transferrable
The Chancellor has addressed one of the unfairest elements of the upcoming legislation change in relation to agricultural and business relief. Unused reliefs can now be transferred between spouses or civil partners, giving more flexibility in succession planning. From April 2026:
- A £1 million cap applies to combined agricultural and business assets at 100% relief
- Any value above £1 million receives 50% relief
- AIM shares and similar will only qualify for 50% relief
This change means unused agricultural and business relief from one spouse is no longer lost, helping farming and business families preserve assets across generations.
Capital gains tax (CGT)
Despite speculation on changes to CGT, the only change is the reduced CGT relief on qualifying disposals to Employee Ownership Trusts (EOTs) from 100% to 50%. This applies to all disposals made on or after 26 November 2025.
Pensions
National insurance (NI) relief on salary sacrifice capped at £2,000 per year
From April 2029, the first £2,000 of salary-sacrificed contributions will remain exempt from NI, but any amount above that will attract both employer and employee NI contributions (NICs). This change could significantly impact higher earners and those using salary sacrifice as part of their retirement planning strategy.
As well as impacting retirement savings, it could also hit those utilising salary sacrifice to manage the £100,000 - £125,140 tax trap, which can result in an effective marginal tax rate of up to 60%, or parents seeking to maintain access to childcare benefits by lowering their income via pension salary sacrifice.
With some time until the proposed rule is planned to come into effect, reviewing contribution strategies early is important.
Aside from the salary sacrifice NI relief cap, there are no additional pension reforms in this Budget. This stability will come as a welcome relief for many who had concerns over changes to tax-free cash and offers an opportunity to review long-term plans and ensure contributions are optimised under current rules.
Investments
Cash ISA allowance reduced to £12,000 for under-65s
From April 2027, the annual cash ISA allowance will fall from £20,000 to £12,000 for those under 65, with the remaining £8,000 required to be invested in stocks and shares ISAs. This move aims to encourage investment but will affect savers who prefer cash. Understanding risk tolerance and exploring investment options will become increasingly important for those considering increasing investment exposure
Increase in Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) limits (but VCT relief cut)
The government is raising investment limits for EIS and VCTs to £10 million, but VCT tax relief will be reduced from 30% to 20% from April 2026. While these vehicles remain attractive for tax-efficient investing, the changes make it essential to review their suitability carefully, particularly given the high risk involved with early-stage investments and their lack of liquidity.
Other notable changes
High-value council tax surcharge
A new annual surcharge will apply to properties worth over £2 million from April 2028, starting at £2,500 for homes worth over £2 million and rising to £7,500 for homes valued above £5 million. While there will be limited planning options to avoid this, it will be an important aspect to take into consideration as part of the cashflow modelling and retirement planning process.
Electric vehicle and hybrid mileage supplement
A new mileage supplement for electric and hybrid vehicles will be introduced at 3p per mile for fully electric vehicles and 1.5p per mile for plug-in hybrids. This will affect business mileage claims and fleet planning, so employers and employees should review policies accordingly.
Helping you navigate what’s next
The Autumn Budget brings with it a number of significant milestones in the coming years impacting income, investments, property, pensions and estate planning. Having the right plan in place can help you preserve and grow your wealth amidst these changes.
Our experts at Evelyn Partners can help understand the Budget’s impact on your financial plan, your investment portfolio or offer a total wealth management perspective on your overall personal financial situation. Book an appointment to discuss what the changes mean for you, and how to navigate what’s next.
