Autumn Budget 2025 — Summary of Key Announcements

Taylor Keeble
16 minutes ago
5 min read

The Chancellor presented her Autumn Budget to Parliament on 26 November 2025, introducing a wide range of measures aimed at restoring fiscal credibility, managing inflationary pressures, and signalling future tax rises. While there were no headline surprises, the Budget adds further complexity to an already intricate tax system, and the full impact will only become clear as consultations and further guidance emerge in the coming weeks.

The Chancellor’s approach appears designed to shore up confidence with financial markets by delivering front-loaded tax increases, in the hope of avoiding additional rises next year. However, uncertainties remain around the economic outlook and whether the OBR’s more pessimistic growth forecasts will materialise.

Corporation Tax

The corporate tax roadmap remains broadly unchanged, confirming the long-term framework for the remainder of this Parliament. The government will:

Maintain the headline corporation tax rate at 25%.
Retain the Small Profits Rate and marginal relief at existing thresholds.
Keep permanent full expensing in place.
Retain the £1 million Annual Investment Allowance, writing-down allowances, and the Structures and Buildings Allowance.
Maintain rates for the merged R&D Expenditure Credit, and continue the Enhanced Support for R&D-Intensive SMEs.
Maintain the Patent Box regime.

Further measures announced:

Late filing penalties for corporation tax returns will be doubled from 1 April 2026 and legislated in Finance Bill 2025/26.
A consultation will take place in early 2026 on standardising corporation tax submissions, including digital formatting and tagged computations.
Finance Bill 2025/26 will set tax treatment for intra-group payments relating to surrendered RDEC, AVEC and VGEC. This will apply to payments made on or after 26 November 2025.
The government will extend 100% first-year allowances (FYA) for:
- Zero-emission company cars, and
- Electric vehicle charging equipment until 31 March 2027 for corporation tax and 5 April 2027 for income tax.

Making Tax Digital (MTD)

MTD for Income Tax will be further expanded:

Sole traders and landlords with income above £20,000 will fall under MTD by the end of this Parliament.
This follows the existing phased rollout:
- April 2026: income above £50,000
- April 2027: income above £30,000

A one-year deferral will apply to several groups including:

Recipients of trust/estate income
Individuals using averaging adjustments
Those eligible for qualifying care relief
Non-UK resident entertainers and sports professionals

Those with Power of Attorney and customers under Court of Protection deputyship will be permanently exempt.

National Minimum Wage and Employment Measures

From 1 April 2026, wage rate increases are as follows:

National Living Wage (21+): up 4.1% to £12.71 per hour
18–20 year olds: up 8.5% to £10.85 per hour
16–17 year olds & apprentices: up 6.0% to £8.00 per hour

For employers, hiring someone aged 21+ at 40 hours per week will cost over £30,000 annually once employer obligations are factored in.

To address youth unemployment, the government will introduce a six-month paid work placement for eligible 18–21-year-olds on Universal Credit for 18 months. It will cover 100% of employment costs for 25 hours per week, plus support services. Implementation details are pending.

Business Rates Relief and Reform

From 1 April 2026, a high-value multiplier will apply to properties with rateable values of £500,000 and above, set at 2.8p above the standard multiplier, leading to a rate of 50.8p in 2026/27.

Further steps include:

Continuing work on reform of the business rates system.
Providing an additional two years of Small Business Rates Relief for firms expanding into a second property.
Launching a call for evidence to address investment barriers and concerns over the receipts and expenditure valuation methodology.

The previously proposed permanent reduced business rate mechanisms for retail, hospitality, and leisure properties remain under consideration.

Inheritance Tax (IHT)

No immediate IHT rate changes were announced. Pre-existing key measures include:

Thresholds remain frozen until April 2031.
From April 2027, unused pension funds and death benefits will form part of the estate.
Finance Bill 2025/26 will increase the £1m APR/BPR allowance in line with CPI from 6 April 2031.
The NRB, RNRB, and taper thresholds will remain frozen until 2030/31.

Capital Gains Tax (CGT)

Several measures significantly impact entrepreneurs and shareholders:

From 6 April 2025, the Business Asset Disposal Relief (BADR) and Investors’ Relief rate increases from 10% to 14%.
From April 2026, this rises again to 18%.
Investors’ Relief lifetime limit was reduced from £10m to £1m for disposals on or after 30 October 2024.

For disposals to Employee Ownership Trusts (EOTs) on or after 26 November 2025, CGT relief will fall from 100% to 50%. Half of the gain will now be chargeable.

Capital Allowances

The government confirmed it will maintain core features:

Permanent full expensing, 100% first-year allowance on qualifying new main rate plant/machinery.
50% first-year allowance on special-rate assets.
£1m Annual Investment Allowance for all businesses.
Flexibility maintained for writing-down allowances.

New measures:

40% First-Year Allowance (FYA) from 1 January 2026 on certain assets, expanding availability to sectors excluded from full expensing (e.g., leasing). Cars, second-hand assets and assets leased overseas remain excluded.
Writing-down allowances reduce from 18% to 14% from April 2026 (corporation tax) and 6 April 2026 (income tax).

VAT

No changes were announced to VAT thresholds, registration limits, or standard rates.

Individuals

Income Tax

The freeze on personal tax thresholds (personal allowance, basic and higher rate bands) will be extended to 2030/31, rather than ending in 2028.

Dividend tax increases from April 2026:

Ordinary rate: 8.75% → 10.75%
Upper rate: 33.75% → 35.75%
Additional rate: unchanged at 39.35%

Property and savings income tax will rise from April 2027:

Basic rate: 20% → 22%
Higher rate: 40% → 42%
Additional rate: 45% → 47%

National Insurance — Pension Salary Sacrifice

From April 2029, the NIC exemption for salary-sacrifice pension contributions will be capped at £2,000 per year.

Employees contributing above £2,000 via salary sacrifice will pay standard employee and employer NICs on the excess. The cap does not apply to salary sacrifice linked to Child Benefit or Tax-Free Childcare access.

Company Car Tax & Electric Vehicles

Rates are confirmed for 2028/29 and 2029/30, with further details to follow:

Zero-emission/electric vehicles: appropriate percentage will increase by 2% annually, reaching 9% in 2029/30.
Vehicles emitting 1–50 g/km: rise to 18% in 2028/29 and 19% in 2029/30.
All other bands rise by 1% per year up to a maximum of 38% in 2028/29 and 39% in 2029/30.

From April 2028, electric vehicles will be subject to a pay-per-mile (eVED) charge:

Battery electric vehicles: 3p per mile
Plug-in hybrids: 1.5p per mile

State Pension & Administrative Changes

The basic and new State Pension will increase by 4.8% from April 2026.

To reduce admin burdens, from 2027/28 pensioners whose only income is the basic/new State Pension will no longer be required to settle small tax balances via Simple Assessment if their pension exceeds the Personal Allowance. Further details will be set out next year.

More Frequent Tax Payments for Self-Assessment

From April 2029, taxpayers with both PAYE and Self-Assessment income will pay a portion of their ITSA liability through PAYE during the year, based on their previous ITSA bill.

The government will consult in early 2026 on: