Why This Budget Matters
The Autumn Budget sets the tone for the UK’s economic strategy over the next five years. From frozen tax thresholds to new property surcharges, these measures aim to raise revenue while addressing fairness in the tax system. Let’s dive into the details.
1. Personal Tax and Income Changes
Tax Threshold Freeze Extended
Personal tax and National Insurance thresholds remain frozen until 2031, extending the previous 2028 deadline.- Personal Allowance: £12,570
- Basic Rate Band: £37,700
- Higher Rate Threshold: £50,270
- Additional Rate Threshold: £125,140
Impact: More earners will move into higher tax bands over time – a phenomenon known as fiscal drag.
Higher Taxes on Property, Dividends and Savings
From April 2026–2027, rates rise by 2 percentage points:- Dividend Tax: Basic 10.75%, Higher 35.75%
- Savings & Property Income: Basic 22%, Higher 42%, Additional 47%
Impact: Landlords and investors should review income strategies.
ISA Changes
Cash ISA limit drops from £20,000 to £12,000, encouraging investment in shares. Overall ISA allowance remains £20,000.Council Tax Surcharge
Homes worth over £2 million face a new surcharge to address regional tax imbalances.
2. Business and Corporate Tax
Corporation Tax
Main rate stays at 25% for profits over £250,000; small profits rate remains 19%.
Impact: 90% of trading companies pay less than 25%.Full Expensing Continues
100% first-year deduction for plant and machinery remains, alongside £1m Annual Investment Allowance.
Business Rates Reform
Lower rates for retail, hospitality and leisure properties under £500,000; higher multipliers for large warehouses.
UK Listing Relief
New Stamp Duty Reserve Tax relief to encourage UK stock listings.
3. Trusts and Inheritance
Employee Ownership Trust Relief Cut
CGT relief drops from 100% to 50% due to rising costs.Inheritance Tax Changes
- APR and BPR capped at 100% for first £1m; 50% thereafter.
- AIM shares restricted to 50% relief from April 2026.
- Pension funds included in estates for IHT from April 2027.
Impact: Estate planning becomes more complex.
4. Self-Employed and Partnerships
Making Tax Digital
Mandatory for sole traders and partnerships from April 2026 for income over £50,000 (reducing to £30,000 in 2027).Furnished Holiday Lettings Abolished
From April 2025, FHL properties taxed under general property rules.
NIC and Compliance
Class 2 NIC abolished; Class 4 NIC remains at 6% (profits £12,570–£50,270) and 2% above £50,270.
HMRC adds 5,000 staff to tackle non-compliance.
5. PAYE and Employment
- Employer NIC: 15% (up from 13.8%).
- Employment Allowance: £10,500.
- Salary sacrifice NIC relief capped at £2,000 from 2029.
- Mandatory payroll reporting for Benefits in Kind from April 2026.
6. VAT and Other Duties
- VAT rates unchanged (20% standard).
- VAT on private school fees continues.
- Fuel duty frozen; EV road pricing expected from 2028.
- New Vaping Products Duty from October 2026.
What Should You Do Next?
- Individuals: Review savings, dividend strategies, and estate planning.
- Businesses: Take advantage of full expensing and plan for digital tax compliance.
- Investors: Reassess ISA allocations and inheritance planning.