The Chancellor’s November 2025 Budget introduced a wide range of tax changes affecting individuals, investors, employers and property owners. Below is a summary of the key announcements and the practical actions you may need to consider.
Income Tax
- Income tax thresholds will remain frozen for a further three years to 6 April 2031.
Action: Review future tax liabilities and plan ahead for potential bracket creep.
- From 6 April 2026, the ordinary (basic) and upper (higher) dividend rates will rise by 2% to 10.75% and 35.75% respectively. The additional rate will remain at 39.35%.
Action: Consider timing of dividends before rate changes.
- From 6 April 2027, property income will be taxed at 22% (basic), 42% (higher), and 47% (additional). Devolved engagement is envisaged for Scotland/Wales alignment.
Action: Review rental profitability and explore tax-efficient ownership structures.
- From 6 April 2027, the savings basic, higher and additional rates will each increase by 2% to 22%, 42% and 47% respectively. The starting rate for savings will be maintained at £5,000 until April 2031.
Action: Assess savings strategy and consider ISA or other tax-efficient options.
- From 6 April 2027, reliefs and allowances will only be applied to property, savings and dividend income after they have been applied to other sources of income.
Action: Reassess income mix to understand impact on your total tax bill.
Inheritance tax (IHT)
- IHT thresholds will remain fixed for a further year to 6 April 2031.
Action: Review estate planning earlier to mitigate rising effective tax burdens.
- Agricultural and business property relief: The £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners.
Action: Consider joint estate planning to maximise reliefs.
Residential property
- A new ‘High Value Council Tax Surcharge’ will apply from 1 April 2028 to residential properties valued at over £2 million. Charges will start at £2,500 per annum, rising to £7,500 per annum for properties valued at over £5 million. The charge will be levied on property owners rather than occupiers.
Action: Check property valuation and factor extra annual cost into planning.
ISA reform
- Overall ISA subscription limits will remain at £20,000 until 2020/31. However, from 6 April 2027, the subscription limit for cash ISAs will be limited to £12,000 for those under the age of 65.
Action: Review investment mix and rebalance ISA contributions.
Salary sacrifice NIC cap
- From 6 April 2029, employee and employer NICs will apply to salary‑sacrificed pension contributions above £2,000 per employee per year. Income tax relief on pension contributions remains unchanged.
Action: Assess pension arrangements and adjust sacrifice levels if needed.
National Living and Minimum Wage
- From 1 April 2026, the National Living Wage will increase by 4.1% to £12.71 per hour. The National Minimum Wage for 18-20 year olds will also increase by 8.5% to £10.85 per hour and for 16-17 year olds and apprentices by 6.0% to £8.00 per hour.
Action: Update payroll budgeting and staffing cost forecasts.
We’re here to guide you through any of these changes – just get in touch. You can also come to our Budget Open Day to speak with our team in person (everyone is welcome, whether you’re a client or not).
