After months of anticipation, including the early release of a report from the Office for Budget Responsibility (OBR), the Chancellor has unveiled the 2025 Autumn Budget, introducing key measures that will shape the UK economy.
Matthew Denney, Tax Partner at Bevan Buckland, shares his analysis with a clear summary of the main announcements and who they are likely to impact most.
We have never had a Budget so late in the year. With the Chancellor seemingly playing for time, hoping for better economic output, we have seen unprecedented amounts of “pitch rolling” or “kite flying”. Amongst this, the Chancellor did a press conference alluding to income tax increases (and therefore breaking the manifesto promise). When you might think things could not get more ridiculous, the OBR mistakenly released their Economic and Fiscal outlook report before the Chancellor even stood up. We knew most of the suite or “smorgasbord” of tax increases before the budget was even delivered.
Whilst there were no increases in income tax as trailed, there were increases amounting to around £26bn by 2029/30. The OBR’s growth predictions were more positive than we expected. This was not a budget to deal with any “blackholes” left by the previous administration, but a “tax and spend” budget to allow the Chancellor to fund the abolition of the 2-child benefit cap, amongst other spending commitments.
Personal Taxation
Increasing income tax rates was politically too difficult. Freezing tax thresholds to collect a further £8bn was too tempting. Fiscal drag will be in place for at least 11 years. The Chancellor conceded that this was a tax on “working people,” but insisted it was necessary nonetheless.
ISA allowances will be retained at £20,000 overall but with the annual cash ISA amount limited at £12,000 to encourage investment in UK equities. Over 65’s are not impacted by this split.
Dividend and savings allowances will also be tightened, and tax rates on dividends, property, and savings income will increase once more, this time by 2%.
With the abolition of the dividend tax credit, taxes on dividends have increased from an effective top rate of 25% in 2016 to a new top rate of 41.35% from April 2027.
Wealth and Property Taxes – England – Not Wales as it stands
Property taxation in England will see significant changes. A high-value council tax surcharge will apply to homes worth over £2 million, raising an estimated £0.4 billion, and council tax bands for higher-value properties will be revalued.
The tax raised will go directly to Westminster. As such Council’s in Wales will not benefit. Presumably, Welsh Government already has sufficient powers via Local Authority powers to increase council tax as it has done with second homes in certain councils. I do not expect an identical policy in Wales would raise sufficient tax to be worth the administration.
Pensions and Savings
From April 2029, salary-sacrificed pension contributions above £2,000 will face National Insurance, meaning contributions above this threshold will be treated as ordinary employee pension contributions. On a positive note, the 25% tax-free lump sum on pension withdrawals remains unchanged, providing continuity for those approaching retirement.
It remains to be seen how this will work for owner-managed businesses, which arguably are not sacrificing salary, simply rewarding themselves with a higher employer contribution, which will not be impacted.
Cost of Living
From April 2026, the National Living Wage for workers aged 21 and over will rise by 4.1% to £12.71 per hour, which equates to an annual increase of around £900 for a full-time worker. The National Minimum Wage for 18 to 20-year-olds will increase by 8.5% to £10.85 per hour, delivering an annual uplift of approximately £1,500 for those working full-time. For younger workers aged 16 to 17 and apprentices, the rate will rise by 6% to £8 per hour. These changes will benefit an estimated 2.7 million workers across the UK. While these increases provide welcome relief for low-paid employees, they also present challenges for businesses already facing rising costs.
Business and Investment
Businesses will see changes to rates and reliefs, with measures aimed at supporting growth while tightening certain allowances to raise revenue. The main rate of the writing down allowance for corporation tax will be reduced, raising £1.5 billion.
For many businesses, the balance between support and increased tax burden will be critical in shaping investment decisions. Key measures include permanent lower business rates for retail, hospitality and leisure from April 2026, a £4.3bn transitional relief package, and 10-year 100% relief for EV charging points. Capital allowances have been strengthened with a permanent 40% First Year Allowance and retention of the £1m Annual Investment Allowance, while full expensing for zero-emission cars and charging infrastructure continues until April 2027. To boost investment, a three-year stamp duty exemption applies to newly listed UK shares, and enterprise tax incentives have been expanded. Sector-specific relief includes an extra year of 40% business rates relief for film studios and abolition of bingo duty from April 2026.
Transport and Green Initiatives
A new mileage tax for electric vehicles will be introduced from April 2028. In 2028–29, the charge will equal £0.03 per mile for battery electric cars and £0.015 per mile for plug-in hybrid cars, with the rate per mile increasing annually in line with CPI. This measure is expected to raise £1.4 billion. While it addresses a long-term funding gap, it may dampen enthusiasm for EV adoption at a time when the government is promoting green transport. Additional funding for EV purchase grants and charging infrastructure is welcome, but whether these measures will accelerate the transition to net zero remains to be seen. The 5p cut in fuel duty will remain until September 2026, after which staged increases will begin, costing £2.4 billion next year and £0.9 billion annually thereafter.
Welfare and Benefits
The two-child benefit cap within Universal Credit will be lifted from April 2026, at an estimated cost of £2.3 billion in 2026–27 and £3.0 billion in 2029–30. While this will help many households, the fiscal impact raises questions about sustainability.
Enhanced fraud prevention measures were also announced, focusing on recovering incorrect Universal Credit payments and improving compliance, which should help reduce waste but may require significant administrative resources.
Summary of Tax Measures and Revenue Impact
Wales: Regional Investment and AI Growth
The Budget has introduced investment in Wales, positioning the region as a key player in the UK’s AI strategy. Two AI Growth Zones have been announced: one in South Wales (Bridgend) and another in North Wales. These zones will benefit from £10 billion of investment over the next decade, creating an estimated 5,000 jobs and driving innovation in advanced technologies. Each zone will receive £5 million in government funding to support skills development and infrastructure, helping local businesses adopt AI solutions and compete globally. This initiative reflects the Government’s commitment to regional growth and technological leadership.
Other notable measures include a temporary stamp duty holiday for newly listed UK shares to boost IPO activity, the Help to Save scheme becoming permanent from 2028, and a 4.8% increase in the State Pension from April 2026 under the triple lock. Local authorities will also gain powers to introduce tourist taxes, and the sugar tax will be expanded to cover additional products.
What Could This Mean for You
These changes will have wide-ranging implications for personal finances, business planning, and household budgets. While some measures provide immediate relief, others introduce new complexities and potential costs. We recommend reviewing your tax position and seeking professional advice to make the most of available allowances and prepare for upcoming changes.
If you would like tailored advice on how these changes affect you or your business, our tax team at Bevan Buckland can guide you through the new rules and help you plan effectively for the year ahead. To speak to one of our experts, please call us on 01792 410100 or email mail@bevanbuckland.co.uk
