Autumn Budget 2025
The key message in this budget was “Fairness: One reason employees pay more tax is because Britain has not historically done enough to make sure assets – and income from assets – contribute fairly.” “Over 560,000 families are expected to see an increase in their benefit payments by an average of £5,310 per year by 2029-30.”
New Wealth & Property - Targeted Taxes - Not Growth-Friendly For shareholders, landlords, business owners and indeed many SMEs - this Budget reallocates risk from the public sector to the private sector, rather than sharing it across the economy in a balanced, growth-friendly manner.
Fiscal Drag is key to many measures, through freezing income tax Personal Allowance at £12,570 and higher rate threshold at £50,270 from April 2028 to April 2031. The additional rate threshold remains at £125,140 from April 2028 to April 2031. This will raise12.5 billion in 2030/31. Due to fiscal drag most pensioners will become tax payers just from their state pension in the next couple of years which seems inherently unfair. Especially when you add the £1.3 billion cost of Winter Fuel payments next year. The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year!
The pension contribution changes also have an element of fiscal drag - they restrict how much extra individuals can pay into private pension funds to £2,000 from 2029 before paying NI. This unfairly targets private sector workers while public sector defined benefit schemes remain unaffected, in a similar way to Gordon Brown in 1997. This will raise nearly £5 billion in tax in 2029-30 which added to the other Private Sector Pension regulations will limit funds available in retirement, widening inequality rather than addressing it.
Increases in Tax Rates – a manifesto pledge clearly broken - The government will create separate tax rates for property income. From 2027-28, the property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%. There will be additional rates of income tax applicable to dividends. From 2026-27, the ordinary rate will be increased by 2 percentage points to 10.75% and the upper rate will be increased by 2 percentage points to 35.75%. The additional rate will remain unchanged at 39.35%. The government is also changing the rates of income tax applicable to savings income. From 2027-28, the savings basic rate will be increased by 2 percentage points to 22%, the savings higher rate will be increased by 2 percentage points to 42% and the savings additional rate will be increased by 2 percentage points to 47%. The government is changing income tax rules so that reliefs and allowances deductible at steps 2 and 3 of the income tax calculation will only be applied to property, savings and dividend income after they have been applied to other sources of income. Overall an attack on assets acquired from post tax income.
The government will introduce the High Value Council Tax Surcharge HVCTS a new charge on owners of residential property in England worth £2 million or more, starting in 2028-29. The Valuation Office will value properties in 2026 and every five years thereafter, leading to significant cost in disputing these. Fiscal drag will mean this surcharge ultimately affects properties valued much lower, not just the £2 million threshold stated now. This is an unfair tax because it is based purely on market value rather than the actual size or utility of the home — a property tax should be aligned to square footage, not fluctuating valuations beyond the owner’s control. A tax on the South East leaving owners of “castles” in Scotland unscathed! At the time of writing Savills have 5 “castle” for sale all well under £2million.
This combined with higher taxes on rental income will inevitably lead to higher rents for tenants, further exacerbating the affordability crisis and reducing supply as smaller landlords exit the market.
Student Loans - The repayment threshold for Plan 2 student loans will be frozen at £29,385 for three years from April 2027 raising £6 billion next year!
Increases to Corporation Tax late filing penalties – The government will
double the penalty for taxpayers submitting a Corporation Tax return late from 1
April 2026. Capital allowances reductions from 18% to 14% on older assets raising £1 billion next year.
Tax Administration - The government will not apply late submission penalties for quarterly updates during the 2026-27 tax year for Income Tax Self-Assessment (ITSA)
taxpayers required to join Making Tax Digital (MTD). The government will apply
the new penalty regime for late submission and late payment to all ITSA taxpayers
not already due to join the new system from 6 April 2027. This will be legislated for
via secondary legislation. The government will increase the penalties due for late
payment of ITSA and VAT from 1 April 2027.
The government will introduce new powers to close in on promoters of marketed tax avoidance including social media. This is unfair as how is avoidance defined and how many legitimate advisors will be caught up in this!! The old Evasion is illegal but avoidance is fine no longer applies. The government will also clamp down on Electronic Sales Suppression, where businesses use illegitimate software to falsely remove sales from the audit trail to evade paying the tax they owe. A crackdown on Umbrella companies with a bill of about £1,000 each employee. New rules on Crypto asset reporting. There will also be new powers to allow HMRC to access advisers files with no court oversight, Enhancing tax transparency on real estate – The UK intends to participate in a new international agreement which will tackle tax evasion by providing for the automatic exchange of readily available information on real estate from 2029 or 2030.
Other Sundry measures - From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000. Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031. Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year
The income tax and National Insurance exemption for employer-provided benefits will be extended to cover reimbursements for eye tests, home working equipment, and flu vaccinations.
Inheritance tax changes creating an “exit” charge will lead to wealthy individuals leaving the UK and preventing them from coming in the first place.
Vehicle Excise Duty to be levied on Electric cars at 3 pence per mile and plugin hybrid cars at 1.5 pence per mile. These low rates will go unnoticed but are the start of taxing you every mile you drive.
Introducing permanently lower tax rates for retail, hospitality and leisure (RHL) properties, worth nearly £900 million a year but costing £2 billion overall.
Overall - this budget is anti-growth and constitutes a direct attack on the private sector. It is fundamentally unfair that those who go out to work, create jobs, invest capital and drive economic output are being punished rather than incentivised. The Office for Budget Responsibility confirms the UK’s tax burden is rising to around 38% of GDP — the highest level in modern history — leaving taxpayers with less disposable income and less capital available for investment. The only opportunity for growth is inflation which the OBR accept will increase due to the measures.