News
Autumn Budget 2025: What the Chancellor Announced and What It Means for You
28 Nov 2025
By James Clark, Tax Partner
The Chancellor’s red box has been opened, and we now know what Wednesday’s Budget means for businesses and individuals across our region.
Rachel Reeves delivered her second Budget with a clear message: stability and gradual change rather than dramatic overhaul. The good news? Many of the more radical measures rumoured beforehand didn’t materialise. The catch? A three-year extension to frozen tax thresholds means more people will be quietly pulled into higher tax brackets as wages rise.
So what does it all mean for you? Here’s our take on the key announcements and how they might affect clients across Shropshire, Cheshire and Wales.
Personal Taxes: The Freeze Continues
The big headline is what didn’t happen, income tax rates are staying put. But there’s a familiar sting in the tail.
Personal tax thresholds have been frozen for another three years until April 2031. That means the Personal Allowance (£12,570), higher rate threshold (£50,270) and additional rate threshold (£125,140) aren’t moving, even as wages rise with inflation.
Translation? More people will be dragged into higher tax brackets over time. The Office for Budget Responsibility estimates that an additional 5.2 million people will be paying income tax by 2030/31 compared to 2012/13, with 4.8 million more in the higher rate band.
It’s fiscal drag in action, not a rate rise, but the same effect for many households.
Dividend, Savings and Property Income: Rising Tax Rates Ahead
This is significant for business owners and landlords. From April 2026, dividend tax rates will increase by 2% across the basic rate & higher rate bands to 10.75% for basic rate taxpayers and 35.75% for higher rate taxpayers. Additional rate band remain the same.
Then from April 2027, both savings income and property income will see a further 2% increase. Property income will be taxed at its own separate rates from April 2027 onwards: 22% for basic rate, 42% for higher rate, and 47% for additional rate taxpayers.
For business owners drawing dividends or landlords with rental income, the cumulative effect of these changes could mean a noticeable increase in your tax bill over the next couple of years. If you’re a director-shareholder, it’s worth reviewing your profit extraction strategy sooner rather than later.
Inheritance Tax: Relief on the Rumours
Good news for some. The much-rumoured cap on lifetime gifting didn’t happen. Neither did changes to the CGT base cost uplift on death or the scrapping of the residence nil-rate band. The seven-year gifting rule remains unchanged.
However, inheritance tax thresholds are frozen for a further year until April 2031. The nil-rate band stays at £325,000 and the residence nil-rate band at £175,000. With property values continuing to rise, especially across our region, more estates are being caught in the IHT net without any policy changes.
There was a positive adjustment for farming families and family business owners. The £1 million allowance for 100% Agricultural Property Relief and Business Property Relief (taking effect from April 2026) will now be transferable between spouses and civil partners. That’s a welcome change for those who’ve been planning around the reforms announced last year, but it doesn’t solve the problem. Further tax planning is still needed.
Business Taxes: Stability with Some Adjustments
The headline rate of corporation tax isn’t changing, it remains at 25% for larger companies and 19% for smaller profits. That’s consistent with the government’s commitment to keeping the lowest corporation tax rate in the G7.
However, there are changes to capital allowances. From January 2026, a permanent 40% first-year allowance will be introduced for qualifying plant and machinery, including for businesses that lease asset. At the same time, the main rate writing-down allowance drops from 18% to 14% from April 2026.
The combined effect? A modest increase in the overall tax take, but with some upfront relief for businesses investing in new equipment.
There’s also positive news for growing businesses. For companies using the Enterprise Management Incentive (EMI) scheme, from April 2026, the employee limit will double from 250 to 500 and the asset limit from £30 million to £120 million in gross assets. The maximum value of EMI options a company can grant also doubles from £3 million to £6 million.
Pensions and Salary Sacrifice: A New Cap
One change that will affect many higher earners: from April 2029, salary sacrifice pension contributions above an annual £2,000 threshold will be subject to both employer and employee National Insurance.
This will limit what’s been a tax-efficient way for many people to boost their pension savings. If you’re currently using salary sacrifice arrangements beyond this level, it’s worth reviewing your strategy well ahead of 2029.
The good news? The 25% tax-free lump sum remains untouched, despite speculation to the contrary.
Other Changes Worth Noting
A few other measures that might affect you:
- From April 2027, the amount you can pay into a cash ISA will reduce from £20,000 to £12,000 for individuals under 65, with the overall ISA allowance remaining at £20,000. The aim is to encourage younger savers towards stocks and shares ISAs.
- CGT relief on disposals to Employee Ownership Trusts has been reduced from 100% to 50% from 26 November 2025.
- A new High Value Council Tax Surcharge will apply to owners of domestic properties in England valued at £2 million or more from April 2028, ranging from £2,500 to £7,500 per annum.
What Should You Do?
In short, now is the time to review your plans. The Budget didn’t contain the dramatic shake-ups some feared, but the cumulative effect of frozen thresholds, rising tax rates on investment income, and tighter reliefs will be felt by many over the coming years.
If you’re a business owner, consider how dividend tax changes might affect your profit extraction strategy. If you’re planning to pass on assets, check whether the inheritance tax changes impact your estate planning. And if you’re drawing income from property or investments, it’s worth modelling what the new rates mean for your cash flow.
We’re hosting our Autumn Budget seminars across Shrewsbury, Cheshire, Newtown, Wrexham and Nantwich next week, where we’ll break down these announcements in more detail and answer your questions.
It’s also a great opportunity to connect with other business owners over breakfast or lunch, and hear directly from our tax team about the practical steps you might want to consider.
