It’s safe to say that this Autumn’s Budget is possibly one of the most shambolic of recent times. After months of speculation, the Chancellor Rachel Reeves shared a speech which contained very few surprises following numerous media briefings and, rather embarrassingly, a leak of the full OBR report before she even stood up.
The main announcements centred around a series of stealth taxes including an extension of the freeze on the personal tax thresholds for three more years. But there were smaller measures too. The aim of all this is to plug the spending gap which currently is estimated to sit at between £20bn and £30bn.
Here’s an overview of the key announcements:
Personal Tax
All current personal thresholds will be frozen until 2030/31. This follows a trend first introduced by Rishi Sunak in Spring 2021. It will bring millions, including pensioners, into new tax brackets and self-assessment. Thankfully for those receiving just the basic or new state pension, simple assessment won’t be needed until April 2027.
Dividends
Income tax rates on dividends will rise from 8.75% to 10.75% for the basic rate and from 33.75% to 35.75% for the higher rate. The additional rate remains 39.35%.
Corporation Tax
Although Corporation Tax rates remain the same, late filing penalties will double from next April.
Pension Cap
From April 2029, a new pension cap will be introduced meaning any pension contributions over £2,000 will be taxed in the same way as other employee pension contributions.
CGT on Employee Ownership Trust
100% CGT relief for disposals of shares to Employee Ownership Trusts will be restricted to 50% with very little notice – the change kicks in this month.
Property
Reported by much of the media as a ‘mansion tax’ there will be a new high-value council tax surcharge in England. This annual charge of £2,500 will apply on properties worth more than £2m, rising to a £7,500 for properties worth more than £5m.
Vehicles
From April 2028, a new mileage tax for electric vehicles will apply. The tax will be charged at £0.03 per mile for battery electric cars and £0.015 per mile for hybrid vehicles. Fuel duty will be frozen until September but after that staged increases will be rolled out.
The Minimum Wage and Apprenticeships
In what’s perhaps the most significant announcement for small businesses, the national minimum wage (NMW) and living wage will increase again. NMW for 18- to 20-year-olds will increase from £10 to £10.85 an hour and the living wage will rise from £12.21 to £12.71. However, the Chancellor has offered support to small businesses with free apprenticeships for SMEs.
Business Rates
There could be some respite for retail, hospitality and leisure businesses with permanently lower business rates for over 750,000 retail, hospitality and leisure properties.
From April 2027
A couple of key changes will kick in from April 2027:
- Income tax rates on property and savings income will rise from 20% to 22% (basic rate), from 40% to 42% (higher rate), and from 45% to 47% (additional rate).
- For the under-65s, ISA rates are changing. Only £12,000 of the annual £20,000 ISA investment limit will be able to be invested in a cash ISA; the other £8,000 will have to be placed in stocks and shares.
Overall, these announcements delivered a mix of stealth tax rises, threshold freezes and targeted revenue-raising measures designed to plug a significant financial gap. While individuals will experience higher tax burdens, businesses face both challenges and limited reliefs. Ultimately, this Budget signals a period of tighter household finances and cautious business planning as the Government prioritises stabilising public spending.
A full and comprehensive overview of all the changes is available in our Autumn Budget Overview.