Chancellor Rachel Reeves has announced tax increases worth up to £26 billion in the Autumn Budget. Key measures include extending the freeze on Income Tax thresholds until 2031, higher taxes on property, savings, and dividend income, and a new levy on homes valued over £2 million. National Insurance will also apply to salary sacrifice pension contributions above £2,000.
On spending, Reeves pledged to cut energy bills by £150 per household from April, freeze rail fares, and scrap the two-child benefit cap. “Money off bills, and in the pockets of working people. That is my choice,” she said.
Tax Changes at a Glance:
- Income Tax thresholds and personal allowance frozen until April 2031.
- Property income tax rates from 2027: 22% (basic), 42% (higher), 47% (additional).
- Savings tax rates rise by 2% from April 2027: 22% (basic), 42% (higher), 47% (additional).
- Dividend tax rates increase from April 2026: 10.75% (basic), 35.75% (higher), 39.35% (additional); allowance remains £500.
- ISA limits frozen until 2031, with new cash cap of £12,000 from 2027, except for those aged over 65 years.
The Autumn Budget introduced key changes for employers and workers:
- National Insurance: Employee NIC rates remain at 8% and 2%, employer rate at 15%. The Secondary Threshold stays at £5,000 until 2031. Employment Allowance remains £10,500.
- Self-Employed: Class 4 NIC rates unchanged at 6% and 2%. From 2026/27, the Lower Earnings Limit rises to £6,708 and Small Profits Threshold to £7,105. Class 2 and 3 NIC rates increase.
- Veterans Relief: Employer NIC relief for hiring veterans extended to April 2028.
- Minimum Wage: The government has announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2026. The rates which will apply are as follows:
| NLW | 18-20 | 16-17 | Apprentices | |
| From 1 April 2026 | £12.71 | £10.85 | £8.00 | £8.00 |
The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.
- Company Cars: Zero-emission car benefit rises to 4% in 2026/27; other low-emission cars up by 1%. Van and fuel benefit charges also increase.
- Payroll Reporting: Mandatory reporting of benefits in kind via payroll software starts April 2027.
- Umbrella Companies: From April 2026, agencies and end clients will be jointly liable for PAYE and NICs to combat tax avoidance.
Further Employment and Benefits Changes
- Car Ownership Schemes: From April 2030, vehicles provided through contrived employee car ownership arrangements will be treated as taxable benefits. Existing schemes remain unchanged until varied or April 2032.
- Salary Sacrifice for Pensions: From April 2029, only the first £2,000 of employee pension contributions via salary sacrifice will be exempt from NICs. Income Tax relief remains unchanged.
- Workplace Benefits Relief: From April 2026, reimbursements for eye tests, flu vaccines, and homeworking equipment will be exempt from tax, aligning with direct provision rules.
- Homeworking Expenses: Tax relief for non-reimbursed homeworking costs will end from April 2026. Employer reimbursements remain exempt.
Business and Capital Taxes: Key Autumn Budget Changes
- Corporation Tax: Rates remain unchanged from April 2026. 25% for profits over £250,000, 19% for small profits. Late filing penalties double from April 2026.
- Capital Allowances: Writing Down Allowance cut to 14% from April 2026. New 40% First Year Allowance for main rate assets from January 2026. Annual Investment Allowance stays at £1m.
- Green Incentives: 100% allowances for zero-emission cars and EV chargepoints extended to 2027.
- R&D: Targeted advance assurance service for SMEs launches spring 2026.
- Investment Schemes: EIS and VCT limits rise significantly from April 2026; VCT Income Tax relief drops to 20%.
- Enterprise Management Incentives: Employee limit doubles to 500; share option limit rises to £6m; exercise period extended to 15 years.
- Capital Gains Tax: Rates unchanged; annual exemption stays at £3,000.
- Employee Ownership Trusts: Relief cut to 50% from November 2025.
- Business Asset Disposal Relief: Rate rises to 18% from April 2026.
- Carried Interest: Taxed under Income Tax rules from April 2026.
- Inheritance Tax: Nil rate bands frozen until 2031. From April 2027, unused pension funds and death benefits included in estates for IHT.
Other Key Measures in Autumn Budget 2025
- Agricultural & Business Property Relief: From April 2026, 100% IHT relief applies up to £1m combined limit; excess gets 50% relief. Allowance transferable between spouses/civil partners. Frozen until 2031.
- Excluded Property in Trusts: £5m cap introduced from April 2025 for offshore excluded property in trusts.
- VAT Threshold: Registration threshold remains £90,000 from April 2026.
- Making Tax Digital: Starts April 2026 for incomes over £50k; phased rollout to £20k by 2028.
- Compliance & Enforcement: HMRC to invest in debt collection, digitalisation, and e-invoicing for VAT from April 2029. PAYE integration for Self Assessment liabilities from 2029.
- Employment Compliance: New Fair Work Agency team from April 2026 to tackle illegal working and tax breaches.
- Electric Vehicle Excise Duty: New mileage-based tax for EVs from April 2028; average cost £240/year.
- Other Announcements: Winter Fuel Payment threshold stays at £35,000; consultation on tax incentives for business founders.
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The above article is for general guidance and informational purposes only and is not intended to constitute legal or professional advice. It should not be taken as specific advice for your own circumstances and relied upon. You are advised to take professional advice before taking any action in relation to the above matters.
