Why this Budget matters

This Budget has been unusual to say the least.

The UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR), published the detailed economic and fiscal outlook before the Chancellor, Rachel Reeves, delivered her speech.

The early release highlighted the scale of the planned tax changes, around £26 billion to £30 billion in additional measures by 2029/30.

With growth remaining modest, inflation still a factor, and public finances under pressure, today’s Budget signals a shift in the tax landscape. Business owners and individuals alike may want to take note of the changes that could affect planning and finances over the coming years.

Note on timing: This article was written immediately following the Autumn Budget 2025. Some details may change as further guidance and technical notes are published. We will provide a full, detailed summary and insight later with all the math worked out later today. To make sure you don’t miss it, sign up to our newsletter here.

Key tax and business‑relevant announcements

Freeze on income tax and employer NIC thresholds

  • Personal income tax thresholds (and employer National Insurance thresholds) will be frozen until at least tax year 2030/31

  • The freeze is forecast to raise around £7.6–8.3 billion per year by 2029/30 as more people are dragged into paying tax or pushed into higher tax bands

  • For business owners paying themselves a salary, this amounts to a tax rise, even if nominal rates remain unchanged

Limit to salary‑sacrifice pension contributions

  • The tax‑efficient perk of paying into pensions via salary sacrifice will be capped. From April 2029, only £2,000 per year can benefit from the exemption; amounts above that will be subject to employee and employer National Insurance.

  • The move is projected to raise £4.7 billion in 2029/30, with further NIC charges in subsequent years

  • For owner‑managed companies and directors who typically use generous pension contributions for tax-efficient remuneration, this reduces the benefit and changes how compensation should be structured

Higher taxes on dividends, savings and property income

  • Taxes on dividend, property and savings income will increase. Dividend and other rates rise by 2 percentage points

  • For business owners and landlords who extract profits via dividends or earn rental income, the cost of extraction increases

Reduced capital‑allowance efficiency (corporation tax “writing down allowance” change)

  • Tax relief on capital expenditure will be less generous — the “writing down allowance” for corporation tax deductions is being reduced

  • That diminishes the tax‑efficient benefit of investing in plant, machinery or long‑lived assets, a hit for companies investing in growth or upgrading equipment.

New mileage‑based tax for electric and plug‑in hybrid vehicles

  • From April 2028, drivers of battery electric and plug‑in hybrid cars will face a “pay‑per‑mile” tax (reported as 3p per mile) instead of relying only on fuel‑duty or benefit‑in‑kind rules

  • For businesses using EVs or hybrids as company cars, the running costs will rise. That reduces some of the tax and environmental attraction of EV company vehicles

New “mansion tax” / high‑value property surcharge

  • Properties worth over £2 million will face a new council‑tax surcharge from April 2028

  • This targets high‑net‑worth individuals and adds a recurring personal cost for those owning expensive homes

Tighter rules on disposals to employee‑ownership trusts (EOTs) / CGT relief changes

  • The favourable tax treatment for disposing shares to an employee ownership trust (EOT) is being scaled back: the full tax relief will be restricted

  • For business owners planning succession, exit or sale via EOTs, the tax advantages are diminished, which may shift planning decisions

Increased duties and tightening tax compliance

  • The Budget includes additional tax and levy measures, for example increased taxation on gambling and strengthened efforts on tax compliance and debt collection

Other significant announcements

Other tax and duty measures

  • Soft drinks levy extended to high-sugar drinks including milk-based drinks.

  • Fuel duty frozen until September 2026, with staged increases thereafter; temporary 5p cut retained.

  • Reforms to savings and ISA rules have also been signalled, including changes to allowances

  • Tobacco, vaping, and alcohol duties to rise with inflation.

  • Gambling taxes rise for remote gambling; in-person rates unchanged.

  • Bing duty abolished.

  • EMI share scheme made more generous.

  • Customs duty on parcels of any value.

  • Abolition of voluntary Class 2 NICs for UK expats.

  • Student loan repayment threshold frozen for three years from 2026/27.

  • Payments from inherited blood compensation free from IHT.

  • 100% ABR/BPR IHT relief now transferrable between spouses.

  • Business rates permanently lower for hospitality premises, funded by online warehouses.

  • New separate “small tax” treatment from 2027 for basic/new state pension recipients.

  • New settlement opportunity on the long-running loan charge.

Spending and relief measures

  • Two-child benefit cap lifted from April 2026.

  • National minimum wage and living wage rates increase from April 2026.

  • State pension rises under the triple lock.

  • £150 average cut on energy bills next year (removing green levies).

  • More resources to crack down on tax and benefits fraud.

  • Additional funds for devolved governments.

  • More sanctions on Russian assets.

  • National debt forecast to rise above £3 trillion for the first time.

  • Rail fares frozen for another year.

These moves reflect a balancing act: while the government raises revenue from higher‑earners and business‑owners, it also seeks to deliver measures that support lower‑income households or ease living‑cost pressures.

What it means in practice — our view

This Budget represents a turning point.

It signals that many of the tax‑efficient strategies businesses and individuals have relied on, dividends, salary‑sacrifice pensions, EV company cars, generous capital allowances, are being wound back.

For owner‑managed firms, small and medium‑sized businesses, and professional practices, this raises the cost of extracting profits, complicates remuneration strategies and reduces the efficiency of future capital spending.

If you were considering exit or succession via an EOT or similar structure, the reduction in reliefs changes the financial attractiveness of that route.

Even for salaried individuals (directors taking a salary), the freeze on thresholds is a tax rise, especially as wages grow with inflation. Over time more people will be pulled into higher tax bands.

This Budget requires rethinking of extraction, remuneration, investment and wealth‑protection strategies.

Reminder: This article was written immediately following the Autumn Budget 2025. Some details may change as further guidance and technical notes are published. We will provide a full, detailed summary and insight later today. To make sure you don’t miss it, sign up to our newsletter here.

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