Author: chanterbrowne

Overview

• Many possible changes were the subject of speculation leading up to the Budget: this list includes things that have been ruled out, as well as changes that the Chancellor announced
• These key points include measures that were announced previously but are about to come into force
• Measures which will not take effect until future dates are listed separately below

Implemented immediately

• 100% CGT relief for disposals of shares to Employee Ownership Trusts is restricted to 50% from 26 November 2025

From January 2026

• New 40% First Year Allowance for most ‘main rate expenditure’ which does not already qualify for ‘full expensing’ or the £1 million Annual Investment Allowance (e.g. assets for leasing and assets above £1 million bought by unincorporated businesses)
• A new Advance Clearance Service to provide certainty for some R&D claims is to be introduced ‘in Spring 2026’ following consultation

From April 2026

• Income tax thresholds and bands frozen (and continue to be frozen until April 2031)
• Income tax rates on dividend income rise from 8.75% to 10.75% (basic rate) and from 33.75% to 35.75% (higher rate); additional rate remains 39.35%
• The same increase will apply to corporation tax payable on loans to close company participators which are not repaid to the company within 9 months of its year end
• The basis for company car benefit charges increases by one percentage point for 2026/27
• Benefit charges for company vans and private fuel in company vehicles increased
• Employers’ NIC threshold frozen at £5,000, and NIC Upper Earnings Limit remains £50,270 (also frozen until 2031)
• NIC Lower Earnings Limit and Small Profits Threshold increased by 3.8%
• Confirmation of the introduction of Making Tax Digital for Income Tax Self-Assessment from April 2026, with easements for the first year in relation to filing penalties
• Writing down allowances on main rate expenditure cut from 18% to 14%, and on special rate expenditure from 6% to 3%, from 1 April 2026 (companies) or 6 April 2026 (unincorporated trades)
• Extension until March 2027 of the 100% first year allowance for qualifying expenditure on zero-emission cars and charging points for electric vehicles
• Corporation Tax late filing penalties doubled from 1 April 2026
• CGT rate on disposals qualifying for Business Asset Disposal Relief increased from 14% to 18%
• CGT relief on incorporation to be claimed from 6 April 2026, rather than applying automatically
• ‘Carried interest’ moved to the income tax regime, with a discount for certain qualifying disposals
• IHT Agricultural Property Relief and Business Property Relief at 100% will only apply to the first £1 million of combined value; above that limit, the maximum relief will be 50%; the £1 million will be transferable between spouses and civil partners
• IHT Business Property Relief restricted to 50% for all ‘unlisted’ shares which are quoted on recognised stock exchanges such as the Alternative Investment Market
• VAT rules changed to prevent private hire vehicle operators using the ‘Tour Operators Margin Scheme’ to pay VAT only on their profit margin
• From July 2026, the Motability scheme will be reformed to reduce the relief available on high-end cars
• Fuel duty remains frozen, and the temporary 5p cut announced in March 2024 will be extended to 31 August 2026
• Increases in online gambling taxes from April 2026
• Increases in National Living Wage and State pension in line with the September 2025 inflation figure (3.8%)
• The ‘two-child benefit cap’ for Universal Credit is removed, increasing the available benefits for claimants with more than two children

From April 2027

• Income tax rates on property and savings income rise from 20% to 22% (basic rate), from 40% to 42% (higher rate), and from 45% to 47% (additional rate)
• For under-65s, no more than £12,000 of the annual £20,000 ISA investment limit can be invested in a cash ISA; the other £8,000 will have to be in stocks and shares

No change, or later

• High Value Council Tax Surcharge to be introduced on properties worth more than £2 million (in 2026) to apply from April 2028: £2,500 for properties over £2 million rising to £7,500 for properties over £5 million
• New mileage based e-Vehicle Excise Duty payable on use of electric and hybrid cars from April 2028
• From April 2029, salary sacrifice schemes putting more than £2,000 into an employee’s pension will be charged to NIC as if cash salary was paid
• All VAT invoices to be electronic from April 2029
• All low value import consignments to be subject to customs duties from April 2029
• Company car tax rates were announced last year for 2028-29 and 2029-30, to provide long-term certainty; the incentives for purchasing electric vehicles will be maintained
• Plan 2 Student Loan repayment thresholds frozen until April 2030

Overview

• Many possible changes were the subject of speculation leading up to the Budget: this list includes things that have been ruled out, as well as changes that the Chancellor announced
• These key points include measures that were announced previously but are about to come into force
• Measures which will not take effect until future dates are listed separately below

Implemented immediately

• Capital Gains Tax rates for disposals on or after 30 October 2024 rise from 10% to 18% (basic rate taxpayers) and 20% to 24% (higher rate taxpayers); the higher rate for residential property remains 24%
• Lifetime limit for gains qualifying for Investors’ Relief is reduced from £10 million to £1 million for disposals on or after 30 October 2024
• Stamp Duty Land Tax surcharge for purchase of additional dwellings increased from 3% to 5% for purchases from 31 October 2024
• Rules tightened for close company loans to participators, transfers of UK pension funds abroad, Employee Ownership Trusts, Employment Benefit Trusts and liquidation of Limited Liability Partnerships to close loopholes from 30 October 2024

From January 2025

• Confirmation that VAT will apply to private school fees from 1 January 2025

From April 2025

• Increase in rate of Employer National Insurance Contributions (ERNIC) from 13.8% to 15%, together with reduction of Secondary Threshold from £9,100 to £5,000
• Increase in Employment Allowance for small businesses’ ERNIC from £5,000 to £10,500 for 2025/26
• Certain ‘double cab pickup vans’ to be treated as cars for some tax purposes
• Extension until March 2026 of the 100% first year allowance for qualifying expenditure on zero-emission cars and charging points for electric vehicles
• Abolition of the remittance basis of taxation for foreign domiciled individuals, to be replaced by a ‘residence-based scheme’
• CGT rate on disposals qualifying for Business Asset Disposal Relief increased from 10% to 14%
• CGT rate on ‘carried interest’ increased to 32%
• IHT Agricultural Property Relief to be extended to land managed under an environmental agreement with government or other approved bodies
• 40% business rates relief for retail, hospitality and leisure businesses for 2025-26 on values up to £110,000
• Charitable business rates relief no longer available for private schools
• Fuel duty remains frozen, and the temporary 5p cut announced in March 2024 will be extended to 22 March 2026
• Rate of interest on late paid tax will increase by 1.5 percentage points
• Security for certain tax reclaims increased by introduction of a requirement for a digital signature
• Above inflation increases in National Living Wage and State pension
• As previously announced, the advantageous tax treatment of Furnished Holiday Lettings no longer applies in 2025/26

From April 2026

• CGT rate on disposals qualifying for Business Asset Disposal Relief increased from 14% to 18%
• ‘Carried interest’ moved to the income tax regime, with a discount for certain qualifying disposals
• IHT Agricultural Property Relief and Business Property Relief at 100% will only apply to the first £1 million of combined value; above that limit, the maximum relief will be 50%
• IHT Business Property Relief restricted to 50% for all ‘unlisted’ shares which are quoted on recognised stock exchanges such as the Alternative Investment Market
• Tightening of rules on charitable tax reliefs and closure of an avoidance scheme involving company cars from 6 April 2026
• Confirmation of the introduction of Making Tax Digital for Income Tax Self-Assessment from April 2026

No change, or later

• Unused pension funds and death benefits payable from a pension will be included in a person’s death estate for IHT purposes from 6 April 2027
• No changes to the ability to draw tax-free lump sums from pension funds, or reintroduction of a lifetime allowance
• The freezing of personal income tax allowances and rate bands will end with 2027/28: inflationary increases will be reintroduced for 2028/29
• Corporation tax rates appear to be fixed for the duration of the Parliament
• Inheritance tax nil rate bands will be frozen at their present levels until April 2030 (extended by two years from the previously announced date); no change to the availability of the additional Residence Nil Rate Band
• ISA and Junior ISA investment limits fixed at their current levels until April 2030
• Company car tax rates announced for 2028-29 and 2029-30, to provide long-term certainty; the incentives for purchasing electric vehicles will be maintained
• Previous Government’s proposal to base High Income Child Benefit Charge on combined household income will not be taken forward – HICBC still based only on the income of the higher earner of a couple

Overview

• Most tax rates and allowances were announced in advance at the Autumn Statement, and the significant new proposals were all predicted – there were no surprises
• These key points include measures that were announced previously but are about to come into force
• Measures which have been announced but will not take effect during 2024 are listed separately below

Personal tax

• The main personal tax-free allowance (£12,570) and the 40% tax rate threshold (£50,270) remain frozen at their present levels until the end of 2027/28, representing a tax rise where income increases
• The 45% threshold remains £125,140 for 2024/25
• Tax-free dividend allowance falls from £1,000 to £500, and CGT annual exempt amount falls from £6,000 to £3,000, for 2024/25
• ISA investment limit remains £20,000 – a new ‘British ISA’ to encourage investment in British companies, with a £5,000 annual limit, will be introduced after consultation
• Further reductions in National Insurance Contributions in addition to those announced in the Autumn Statement: from 6 April 2024, Employees’ Class 1 NIC reduced from 10% (was 12% up to 5 January 2024) to 8%, and Class 4 NIC rate for the self-employed cut from 9% to 6% (a cut to 8% was announced in the Autumn Statement)
• The income threshold above which Child Benefit is clawed back by the High Income Child Benefit Charge (HICBC) will rise from £50,000 to £60,000 in 2024/25, and the clawback will be spread over £20,000 of income (instead of £10,000 up to now)
• The higher rate of CGT payable on disposals of residential property will fall from 28% to 24% for disposals from 6 April 2024
• Stamp Duty Land Tax Multiple Dwellings Relief to be abolished from 1 June 2024
• IHT thresholds and rates unchanged to the end of 2027/28

Business tax

• No significant changes to corporation tax or capital allowances
• Extensions to the tax reliefs available to creative industries
• Increase in the VAT registration turnover threshold from £85,000 to £90,000 from 1 April 2024
• Recovery Loan Scheme renamed as Growth Guarantee Scheme and extended to support small and medium enterprises (SMEs)

Tax measures to be introduced later

• The beneficial treatment of short-term Furnished Holiday Lettings as a trade for tax purposes will be abolished from 6 April 2025
• The advantageous treatment of non-UK domiciled individuals (‘non-doms’) will be abolished from 6 April 2025, and will be replaced by a residence-based system with transitional rules for those affected
• The HICBC will be assessed on the combined income of a household from 6 April 2026, to remove the present unfair treatment of a single-earner household
• ‘Full expensing’ tax relief for company purchases of capital assets will be extended to leased assets when fiscal conditions allow, following a consultation

Other measures

• Fuel duty frozen, and temporary 5p reduction retained, for another year
• HMRC given more money to collect outstanding tax debts, budgeted to raise approximately £1 billion every year from 2025/26 to 2028/29