The UK Autumn Budget 2025, delivered by Chancellor Rachel Reeves on 26 November 2025, focuses on raising revenue through targeted tax increases on wealth, savings, property, and dividends, while maintaining manifesto pledges not to raise headline rates of income tax, National Insurance contributions (NICs), or VAT. Overall, the measures are forecast to raise £26 billion by 2029-30, contributing to a fiscal consolidation that reduces borrowing by £12 billion in that year, though borrowing is expected to rise in the interim years (2025-26 to 2028-29) before falling. This backloaded approach supports public investment (e.g., £50 billion additional in day-to-day spending and £120 billion in capital by 2029-30) while pushing the tax take as a share of GDP to a record 38.3% by 2030-31. The distributional impact favours lower-income households, with tax rises concentrated on higher earners and wealth holders.
Below is a summary of the key changes by tax area, including effective dates, revenue estimates (where available), and implications. Changes are drawn from official OBR forecasts, HM Treasury documents, and expert analyses.
1. Income Tax and National Insurance Contributions (NICs)
|
Change |
Details |
Effective Date |
Estimated Revenue (by 2029-30) |
Implications |
|
Freeze on personal allowances and thresholds |
Personal allowance (£12,570), basic rate band, and higher/additional rate thresholds frozen until 2030-31 (extended from prior plans). |
Ongoing from 2021-22, extended to 2030-31. |
£8.3 billion (the highest single revenue raiser). |
"Fiscal drag" pulls more workers into tax-paying or higher brackets as wages rise with inflation, reducing take-home pay (e.g., 1.5 million more higher-rate taxpayers by 2030). No change to rates (20%, 40%, 45%), but erodes real income for middle earners; lowest deciles benefit from spending offsets. |
|
NICs thresholds frozen |
Employee and employer NICs thresholds unchanged. |
Ongoing, extended to 2030-31. |
Included in the above. |
Increases effective tax on employment income; employers may cut jobs or wages, exacerbating labor market weakness (unemployment rising to 4.5% forecast). |
|
Salary sacrifice for pensions |
NIC relief on pension contributions via salary sacrifice is capped at £2,000 per year (employee and employer). |
6 April 2029. |
Not specified (minor). |
Reduces incentive for high earners to use pensions for tax planning; may shift savings to taxable vehicles, increasing future liabilities. No change to income tax relief or £268,275 lump-sum allowance. |
2. Capital Gains Tax (CGT)
|
Change |
Details |
Effective Date |
Estimated Revenue (by 2029-30) |
Implications |
|
Relief on Employee Ownership Trusts (EOTs) |
100% CGT relief on qualifying disposals reduced to 50%; no BADR/investors' relief on the gain. |
26 November 2025 (immediate). |
Not specified. |
Discourages employee buyouts, potentially slowing business succession and ownership diversification; affects SMEs with gains over £1,000 (taxed at 10-20% rates otherwise). |
|
Anti-avoidance on share exchanges/reconstructions |
Tightened rules deny tax-neutral treatment if the main purpose is a tax advantage. |
26 November 2025. |
Minor (anti-avoidance). |
Closes loopholes in corporate restructurings; increases compliance costs for legitimate planning but targets aggressive avoidance. |
|
Non-resident CGT (protected cell companies) |
Tightened rules for non-UK residents using PCCs. |
6 April 2026. |
Not specified. |
Reduces offshore avoidance; may deter foreign investment in UK assets. Overall CGT receipts forecast to double to £30 billion by 2030-31. |
3. Inheritance Tax (IHT)
|
Change |
Details |
Effective Date |
Estimated Revenue (by 2029-30) |
Implications |
|
Freeze on nil-rate and residence nil-rate bands |
£325,000 nil-rate band and £175,000 residence nil-rate band frozen. |
Until 2030-31. |
Contributes to £14.5 billion total IHT by 2030-31. |
More estates (up 20% by 2030) pulled into IHT at 40% rate as asset values rise; impacts middle-class families with property. |
|
Pensions included in estates |
Unspent pensions taxed as part of the estate (from prior announcement). |
6 April 2027. |
Included above. |
Ends tax-free status on death; encourages lifetime drawdown/spending, reducing pension pot inheritance (average £100,000+ affected). Option to withhold 50% by scheme admins for up to 15 months. |
|
Cap on relevant property charges for pre-2024 trusts |
£5 million cap on periodic/exit charges for excluded property trusts settled by former non-doms before 30 Oct 2024. |
Backdated to 6 April 2025. |
Not specified (relief measure). |
Eases burden on legacy non-dom trusts; retrospective relief avoids disputes but highlights shift to residence-based IHT. |
|
Tightened residency for personal reps |
UK residency test for deceased based solely on tax residence at death (not long-term resident status). |
Retrospective from 6 April 2025. |
Minor. |
Simplifies but may increase IHT exposure for recent returnees. |
4. Savings and Dividend Tax
|
Change |
Details |
Effective Date |
Estimated Revenue (by 2029-30) |
Implications |
|
Increased rates on savings income |
Basic rate: 21% (up 1%); higher: 42% (up 2%); additional: 45% (up from 39.35%). Personal savings allowance unchanged (£1,000/£500/£0). |
6 April 2026. |
Part of £8 billion from wealth taxes. |
Higher earners face bigger bills on interest (e.g., £10,000 savings at 4% yield costs extra £200 for higher-rate taxpayers); reduces appeal of cash ISAs. |
|
Increased dividend tax rates |
Basic: 10.75% (up 2%); higher: 35.75% (up 2%); additional: 39.35% (up 2%). Dividend allowance (£500) unchanged. |
6 April 2026. |
Included above. |
Hits investors/shareholders; £10,000 dividends cost an extra £200 for basic-rate taxpayers. Taxed after non-savings income, eroding personal allowance use. |
|
ISA mandate for investments |
£20,000 annual limit unchanged, but £8,000 must be in qualifying investments (exempt over-65s). |
6 April 2027. |
Behavioural (encourages investment). |
Pushes savers toward stocks/funds over cash; boosts market liquidity but risks losses for risk-averse individuals. |
5. Property Taxes
|
Change |
Details |
Effective Date |
Estimated Revenue (by 2029-30) |
Implications |
|
Higher rates on property income |
Basic: 21% (up 1%); higher: 42% (up 2%); additional: 45% (up from 39.35%). Applies after non-savings/dividend income. |
6 April 2027. |
Part of the wealth tax package. |
Landlords face £500+ extra tax on £10,000 rental profit; may raise rents (5-10% hike forecast) or prompt sales, tightening supply and pushing up house prices. |
|
New surcharge on high-value homes |
1% annual surcharge on homes in England worth >£2 million (mansion tax-style). |
6 April 2028. |
£1-2 billion annually. |
Targets ultra-wealthy (10,000+ properties); could depress the top end of the market (5-7% price drop) and encourage relocation/offshoring. No change to Stamp Duty Land Tax thresholds. |
6. Business and Other Taxes
|
Change |
Details |
Effective Date |
Estimated Revenue (by 2029-30) |
Implications |
|
Capital allowances reforms |
New 40% first-year allowance for main-rate assets; writing-down allowance reduced from 18% to 14%. |
1 January 2026 (FYA); April 2026 (WDA). |
Neutral (incentivises investment). |
Encourages £10-15 billion annual capex in plant/machinery; benefits manufacturing/tech but slows depreciation for long-term assets. |
|
Venture capital incentives expanded |
Higher limits for EIS/VCT investments; EMI scheme widened. |
April 2026. |
Behavioural (growth-focused). |
Boosts £2-3 billion in startup funding; tax reliefs (30-50% income tax reduction) aid high-risk investors. |
|
Stamp Duty Reserve Tax (SDRT) listing relief |
0.5% exemption for new listings on UK markets (3-year window). |
Immediate. |
Minor (pro-business). |
Eases £50-100 million burden for AIM/LSE flotations; supports 500+ new listings annually. |
|
VAT on private hire vehicles |
Full VAT on supplies (post-Bolt case); no TOMS exemption. |
Immediate. |
£200-300 million. |
Raises taxi/Uber fares (5-10p/mile); operators may pass on costs, hitting low-income commuters. |
|
Environmental taxes |
Landfill Tax standard rate +RPI; CCL rates +RPI from 2027; Carbon Price Support frozen at £18/tCO₂. |
April 2027. |
£500 million+. |
Incremental green push; minimal short-term business impact but aligns with net-zero goals. |
Broader Economic and Fiscal Implications
- Winners and Losers: Lowest-income deciles gain from spending (e.g., a 4.8% state pension rise to £12,547 in 2026, and an energy levy shift to general tax). Higher earners/asset owners lose most (£8 billion from wealth taxes alone).
- Growth and Stability: Measures aim for "stability and investment" amid 3.6% inflation and a weakening jobs market, but fiscal drag and property hikes could slow GDP growth (OBR: 1.5% in 2025, averaging 1.8% to 2030).
- Risks: Smaller taxes may underperform forecasts, risking future rises; backloaded consolidation delays pain but builds £21.7 billion headroom.
- Advice: Review pensions, investments, and property ASAP; consult advisers for non-dom/estate planning. Changes subject to scrutiny under the Finance Bill 2025-26.
For full details, see HM Treasury's Budget document or OBR Economic and Fiscal Outlook.