Autumn Budget 2025 Summary

Chancellor of the Exchequer, Rachel Reeves, delivered the 2025 Autumn Budget against a backdrop of weak economic growth and significant pressure on the public finances. As expected, the Budget included a series of tax-raising measures, many of which will take effect over the next several years.

The headline changes have been summarised below:

• 2% increase in basic and higher rate income tax on dividends (from 8.75% to 10.75% and 33.75% to 35.75%) from 6 April 2026 (i.e. not the additional rate which stays at 39.35%).
• 2% increase in all income tax rates applicable on interest and property income from 6 April 2027.
• Freeze in income tax and National Insurance Contributions (“NIC”) allowances and thresholds until 2030/31.
• £1m Inheritance Tax Business Relief allowance to be transferrable between spouses.
• Cap of £2,000 for NIC exempt salary sacrifice pension contributions from 6 April 2029. (Normal employer contributions still NIC exempt)
• Restriction in amount that can be invested in cash ISAs to £12k per annum (excludes over 65’s).
• Capital allowances writing down rate reduced from 18% to 14% per annum, but with a new 40% first year allowance (from 6 April 2026).
• Removal of council tax cap for properties worth over £2m, with council tax “surcharge” from £2.5k (£2m to £2.5m) to £7.5k (over £5m) from April 2028.
• Relaxation of the qualifying conditions applicable to EMI Share Option Plans.

Whilst the above measures may be less detrimental than initially anticipated, several of the more significant and impactful changes announced in the October 2024 Autumn Statement are still yet to take effect. In particular, the introduction of a £1 million lifetime cap on the total value of assets qualifying for 100% Business Relief and Agricultural Property Relief is scheduled to commence on 6 April 2026.

We’ve published a summary report to cover the key details and outline what the changes might mean for you and your business.

If you would like to discuss the potential impact as well as the tax planning solutions available in relation to any of the measures introduced as part of the November 2025 and/or October 2024 Autumn Statement, please get in touch with our Tax Director, Daniel Andreca, by phone at 01924 669 500, or by email at Daniel.Andreca@parsons.co.uk.