The Chancellor’s 2025 Autumn Budget aims to ease pressures while keeping growth on track. We’ll unpack everything in detail in our full newsletter on Friday, but for now we’ve flagged the biggest shifts to watch. As more guidance lands, our team will be on hand to help you understand what this means for you and your business.

Top Changes for business owners:

1. Dividend Tax Rates Increased by 2 Percentage Points

• New rates apply from April 2026.

• Directors taking dividends will see tax rise to 10.75% / 35.75% / 41.35% depending on band.

• Impact on those extracting profits via dividends.

2. Salary Sacrifice Pension Contributions Capped at £2,000

• Comes into effect April 2029.

• Contributions above £2,000 via salary sacrifice will lose NIC relief and be taxed like normal earnings.

3. Full Expensing Retained + New 40% First-Year Allowance

• Businesses continue claiming 100% full expensing on qualifying assets.

• Additional 40% first-year allowance boosts upfront tax relief for investment.

• Reduction in writing down allowances from 18% to 14% from April 2026.

Top Changes for Individuals (Including Landlords)

1. Higher Taxes on Rental, Savings & Investment Income

• Takes effect from April 2027 for property and savings income.

• Landlords’ rental profits taxed at: 22% / 42% / 47% depending on band.

2. Freezing of Personal Allowances & Tax Thresholds

• Extended freeze from 2028 for a further three years (to April 2031).

• Affects all individuals, pulling more people into higher tax bands (“fiscal drag”).

• Impacts directors and landlords personally as well as PAYE earners.

Additional points to note:

CGT – Employee Ownership Trusts

• Relief on sales to Employee Ownership Trusts reduced from 100% to 50%.

• This halves the tax advantage previously available to founders selling into an EOT structure.

• Business owners considering succession via an EOT will need to reassess timing, structure and net proceeds.

Fuel Duty Freeze & New 3p-per-mile Charge for Electric Cars

• Fuel duty has been frozen again, keeping petrol and diesel rates unchanged for another year.

• At the same time, the government will introduce a 3p-per-mile road charge for electric vehicles from 2026.

• This marks a shift towards equalising motoring taxes and will influence running-cost planning for EV drivers and business fleets.

As always, these measures will evolve as the full detail emerge over the coming days. We’ll be here throughout to guide you through what these changes mean for you. If you’d like to discuss any of today’s changes or need help planning ahead, our team is ready to support you - simply click here to send us an email.

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