Autumn Budget 2025 – Key tax changes in tax year 2026-27 explained
The Autumn Budget 2025 introduces wide-ranging reforms across personal, business, and property taxation. Here’s a practical summary of what matters for individuals, landlords, and businesses. By Dr. Mehmood Jamshed DBA, AFA, MIPA Certified Accountant, Tax Advisor & Business Consultant. Managing Director My Tax Advisors And Accountants Ltd.Personal taxes
- Threshold freeze: Income tax personal allowance (£12,570), higher rate (£50,270), and additional rate (£125,140) are frozen until 2030–31, increasing effective tax through fiscal drag.
- Dividend rates: From 6 April 2026, ordinary rate 10.75% and upper rate 35.75%; additional rate remains 39.35%.
- Savings & property income rates: From 6 April 2027, savings and property income rise by 2% (basic 22%, higher 42%, additional 47%). Mortgage interest relief restricted to 22% for property income.
- Cash ISA change: From 6 April 2027, cash ISA limit set at £12,000 within the £20,000 overall allowance for those under 65.
- Salary sacrifice NIC cap: From 6 April 2029, NIC relief on pension salary sacrifice capped at £2,000 per year.
- Winter fuel payment charge: From 2025–26, pensioners with income above £35,000 will face a clawback charge collected via PAYE or self assessment.
Property and stamp taxes
- High-value council tax surcharge: From April 2028, owners of properties valued over £2m pay an annual surcharge: £2,500 (£2m–£2.5m), £3,500 (£2.5m–£3.5m), £5,000 (£3.5m–£5m), £7,500 (£5m+).
- Stamp taxes modernisation: Government plans to replace Stamp Duty and SDRT with a single securities transfer charge.
- SDRT UK listing relief: Three-year 0.5% SDRT exemption for newly UK-listed securities and depositary interests applies to transfers agreed after 27 November 2025.
Business and employment taxes
- Capital allowances: New 40% first-year allowance for main rate assets from 1 January 2026; main rate WDA reduced from 18% to 14% from April 2026. 100% FYAs for zero‑emission cars and charge points extended to 2027.
- Enterprise schemes: From 6 April 2026, EIS/VCT investment caps and company size limits increase; VCT income tax relief reduces from 30% to 20%.
- EMI changes: From 6 April 2026, EMI limits expand to £6m options, £120m gross assets, and 500 employees; exercise period extends to 15 years.
- Employment measures: From 6 April 2026, employer reimbursements for eye tests, homeworking equipment, and flu vaccinations are tax/NIC-exempt; unreimbursed homeworking expenses become non-deductible.
- Minimum wage: From 1 April 2026, NLW rises to £12.71 (21+); other bands increase accordingly.
- Cryptoasset reporting: CARF rules effective 1 January 2026 require UK RCASPs to collect and report specified customer data; first report due by 31 May 2027.
VAT, environmental and excise
- Mandatory e‑invoicing: All VAT invoices must be electronic from 2029; UK regime design work begins January 2026.
- VAT donations relief: From 1 April 2026, targeted VAT relief for business donations of eligible goods to charities.
- TOMS exclusion: From 2 January 2026, taxi/private hire vehicle journeys excluded from the Tour Operators’ Margin Scheme.
- Motability VAT/IPT changes: From 1 July 2026, VAT zero-rating removed for most leases (retains zero-rate for wheelchair/stretcher adaptations); IPT exemption narrowed to adapted vehicles.
- EV charges & VED: From April 2028, mileage-based charge applies (EVs and PHEVs); from 1 April 2026, zero-emission “expensive car supplement” threshold increases to £50,000.
- Fuel duty: Freeze extended to September 2026; thereafter uprated annually by RPI from April 2027.
- Gaming & betting duties: Remote gaming duty rises to 40% from April 2026; bingo duty abolished; remote betting duty 25% from April 2027.
Inheritance tax and capital gains
- IHT thresholds: Nil rate band (£325,000) and residence nil rate band (£175,000) frozen until 2030–31.
- Agricultural/business property relief: From 6 April 2026, combined £1m 100% relief cap transferable between spouses/civil partners.
- Pensions in IHT: From 6 April 2027, unused pension funds can fall within the estate, with PR safeguards.
- EOT CGT relief: From 26 November 2025, relief on disposals to employee ownership trusts limited to 50% of the gain.
- Incorporation relief: For transfers on/after 6 April 2026, claims must be made via the self assessment return.
🏢 What This Means for Clients
- Landlords and property investors: Higher property tax rates will directly affect rental yields and investment returns.
- Business owners: Free training for under-25 apprenticeships offers opportunities, but compliance costs will rise with e-invoicing and stricter HMRC enforcement.
- Employees and families: Frozen thresholds and capped pension relief reduce take-home pay, though benefit reforms may offset costs for some households.
✅ Our Advice
At My Tax Advisors And Accountants Ltd, we recommend:- Reviewing property portfolios to assess the impact of higher tax rates.
- Planning for cash flow adjustments ahead of frozen thresholds and pension relief caps.
- Preparing for digital compliance with VAT e-invoicing requirements.
- Considering apprenticeship opportunities to benefit from government-funded training.