Autumn Budget Statement 2025 - Overview

Rachel Reeves delivered her second Budget on 26 November 2025. We summarise here the key announcements, and additional detail can be found for individuals and businesses. 

1. Overall Context

• The Chancellor announced tax-raising measures worth £26 billion, including an extended freeze on Income Tax thresholds until April 2031.

• Additional measures include higher taxes on property, dividends, and savings income to be introduced over the next two years, plus a new tax on homes valued above £2 million.

• Cost-of-living support: energy bill cuts (average £150/year), rail fare freeze, and removal of the two-child benefit cap. 

2. Personal Tax 

• Income Tax thresholds: Basic (£37,700), Higher (£50,270), Additional (£125,140) frozen for a further 3 years until 2031. 

• Personal allowance: £12,570 frozen until 2031; tapers above £100,000. 

• Property income tax rises by 2% from 2027/28 (to 22%, 42%, 47%). 

• Dividend tax rates increase by 2% from April 2026 at basic and higher rates; additional rate unchanged and allowance remains £500. 

• ISA limits frozen until 2031; cash ISA element cap drops to £12,000 from 2027 for under-65s. 

3. Employment

• NIC rates unchanged; employer threshold stays at £5,000 until 2031.

• National Living Wage rises to £12.71/hour from April 2026.

• Mandatory payroll reporting for benefits from April 2027.

• Salary sacrifice NIC exemption for pension contributions capped at £2,000 from April 2029 to bring contributions above £2,000 in line with employee contributions.

Relief extended for employer reimbursements (eye tests, home equipment) and introduced for flu vaccines from April 2026. 

4. Business 

• Corporation Tax: remains at 25% for large companies, 19% for small profits. 

• New 40% first-year allowance from Jan 2026 available to unincorporated business as well as companies; main writing-down rate drops to 14%. 

• Significant expansion of EIS/VCT reliefs and EMI scheme limits from April 2026. 

5. Capital Taxes 

• CGT rates unchanged; annual exemption stays at £3,000. 

• Employee Ownership Trust relief cut to 50%. 

• Inheritance Tax nil rate band frozen until 2031. 

6. Other Measures 

• VAT registration threshold remains £90,000. 

• Mandatory e-invoicing for VAT from April 2029. 

• High Value Council Tax surcharge from April 2028 for properties worth £2m+. 

• EV “road tax” (Excise Duty) from April 2028: 3p per mile.