What the Autumn Budget 2025 Means for You
- jaygosal
- 5 days ago
- 6 min read
The Autumn Budget 2025 brings significant tax changes that will impact UK small businesses, property owners, and investors. With £26 billion in new tax measures, it's crucial to understand how these changes affect your financial planning.
At AccountingBliss, we believe every business owner deserves clarity when navigating tax changes. This guide breaks down the key Budget 2025 announcements so you can make informed decisions about your finances.
Personal Tax Changes
Tax Threshold Freeze Extended
The Government is extending the freeze on personal tax thresholds until April 2031 - three years longer than originally planned.
What this means for you…
This "stealth tax" means more of your income will be taxed at higher rates as your earnings increase with inflation, even though the headline tax rates aren't changing. As you earn more over time, you'll be pushed into higher tax brackets without the personal tax thresholds adjusting for inflation.
Landlords: Property Income Tax Increases by 2%
If you're earning rental income, prepare for profits to be taxed at higher rates from April 2027.
The changes:
Basic rate property tax rises from 20% to 22%
Higher rate increases from 40% to 42%
Additional rate climbs from 45% to 47%
These changes apply in England, Wales, and Northern Ireland. For landlords, this represents a significant reduction in net rental income - especially when combined with existing restrictions on mortgage interest relief.
Strategic planning opportunity:
Now is the time to review your property portfolio structure. There may be more tax-efficient ways to hold your rental properties that could save you thousands in tax.
For Investors: Dividend and Savings Tax Increases
The Budget 2025 introduces tax rises on both dividend and savings income, impacting business owners who take income through dividends.
Dividend tax changes (from April 2026):
Basic rate: increases from 8.75% to 10.75%
Higher rate: increases from 33.75% to 35.75%
Additional rate: remains at 39.35%
For business owners, if you currently take dividends from your limited company, these changes will reduce your net income. It's essential to review your salary-dividend mix to find the most tax-efficient balance for your circumstances.
Savings income tax changes (from April 2027):
All savings income tax rates will increase by 2% across all bands.
ISA Savers Under 65: New Cash ISA Cap
From April 2027, savers under 65 will face a new restriction on cash ISAs.
The change…
The amount you can save into cash ISAs will be capped at £12,000 per year, with the remaining £8,000 (of the £20,000 total allowance) reserved for stocks and shares or other investment ISAs. Over 65s can still save up to £20,000 in cash ISAs.
This change encourages younger savers to invest rather than hold everything in cash, but it reduces flexibility for those preferring lower-risk savings options.
High-Value Property Owners: New Council Tax Surcharge
If you own residential property valued over £2 million, a new High Value Council Tax Surcharge (HVCTS) will apply from April 2028.
The charges:
Properties valued £2-5 million: £2,500 per year
Properties valued over £5 million: £7,500 per year
Importantly, the owner - not the occupier - is liable for this charge, even if they rent out the property. This is in addition to existing council tax liabilities.
Business Tax Changes
For Employers: Rising Employment Costs. Several Budget 2025 measures will increase the cost of employing staff.
National Living Wage and Minimum Wage increases (from April 2026):
National Living Wage increases 4.1% from £12.21 to £12.71 per hour
National Minimum Wage (18-20 year olds) increases 8.5% from £10.00 to £10.85
National Minimum Wage (16-17 year olds and apprentices) increases 6% from £7.55 to £8.00
For a full-time employee on National Living Wage (35 hours/week), this represents an extra £910 per year before employer National Insurance and pension contributions.
Pension salary sacrifice cap (from April 2029):
A new £2,000 per year cap will apply to salary sacrifice pension contributions that are exempt from National Insurance. Contributions above this will be treated as ordinary employee contributions and subject to both employer and employee NICs.
While 2029 seems distant, forward-thinking businesses should start planning how to adapt their remuneration strategies.
For Electric Vehicle Drivers and Fleet Operators
The Budget introduces new charges for electric vehicles while adjusting incentives.
New Electric Vehicle Excise Duty (from April 2028), a new mileage base charge on EVs and plug in hybrids increasing annually with Consumer Price Index (CPI) as follows:
Battery EVs: £0.03 per mile
Plug-in hybrids: £0.015 per mile
This mileage-based charge comes in addition to standard Vehicle Excise Duty.
The positive change…
The expensive car supplement threshold for battery EVs increases from £40,000 to £50,000 in April 2026, reducing the tax burden on mid-range electric vehicles.
Fuel Drivers: Extended 5p Cut but Future Increases
For petrol and diesel drivers, the 5p fuel duty cut extends to August 2026 (five extra months). However, the Government will introduce gradual increases:
1p increase on September 1, 2026
2p increase on December 1, 2026
2p increase on March 1, 2027
RPI-linked increases from April 2027
Business Owners Selling to Employee Ownership Trusts
From midnight 26th November 2025 Capital Gains Tax relief on EOT disposals has been reduced from 100% to 50%. This means half of your gains will now be subject to CGT, significantly reducing the tax benefit of EOT sales.
If you've been considering this route, the window for 100% relief has closed.
Enterprise Management Incentive Improvements
Small businesses using Enterprise Management Incentive (EMI) share schemes to attract and retain talent will welcome expanded thresholds:
From Finance Bill 2025/26:
Employee limit increases from 250 to 500
Gross assets limit increases from £30 million to £120 million
Total scheme value doubles from £3 million to £6 million
Finance Bill 2026/27 will abolish the requirement to formally notify HMRC of EMI option grants - removing a persistent administrative burden.
Capital Allowances: Changes for Asset Purchases
If your business invests in equipment, vehicles, or other qualifying assets, the Budget brings mixed news.
The reduction:
The main Writing Down Allowance rate decreases from 18% to 14% from April 2026.
The offset:
A new 40% First Year Allowance in the year of purchase helps balance the lower ongoing rate. However, this excludes second-hand assets and cars.
The timing of capital purchases becomes more important. Claiming 40% relief in year one followed by 14% ongoing may be more or less beneficial depending on your profit profile and tax position.
VAT Registration Threshold Unchanged
Good news for small businesses, despite speculation the VAT registration threshold remains unchanged at £90,000.
However, from April 2029, all VAT invoices must be issued in a specified electronic format. The Government will work with stakeholders to develop an implementation plan to be published at Budget 2026.
Business Rates
If you operate in retail, hospitality, or leisure sectors in England, the Government is introducing reduced business rates multipliers to support over 750,000 properties.
The rates for 2026-27:
Small business RHL multiplier: 38.2p (5p below standard rate)
Standard RHL multiplier: 43p (5p below standard rate)
How it's funded:
A higher rate applies to the most valuable properties with rateable values of £500,000+ (approximately 1% of properties). Most businesses will see no bill increases, with just under a quarter seeing reductions.
What Should You Do Next?
The Budget 2025 small business tax changes are complex and affect different businesses in different ways. The right strategy for your circumstances depends on your specific situation, your business structure, income sources, growth plans and personal goals.
Don't navigate these changes alone.
At AccountingBliss, we help business owners like you gain financial clarity and confidence. We'll review how Budget 2025 affects your specific situation and create a strategic tax plan that minimises your liability while supporting your business goals.
Get in touch to see how the Budget impacts you
Book your Financial Clarity Call today and discover:
Exactly how much these Budget changes will cost (or save) your business
Tax-efficient strategies tailored to your circumstances
A clear action plan to implement before the changes take effect
Peace of mind knowing you're prepared and compliant
Together, we'll turn Budget 2025 complexity into clarity - so you can focus on building the business and life you actually want
Jay Gosal is a Chartered Accountant and founder of AccountingBliss, helping UK business owners master their finances, optimise tax and create lasting wealth. With over 20 years of corporate accounting experience and expertise combining traditional finance with business coaching, Jay supports entrepreneurs in building businesses that fund the life they actually want.
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