The 2025 Autumn Budget continued it's flirtation with controversy, both pre and post announcement. Moreover, it got off to a shambolic start, courtesy of The Office of Budget Responsibility. They issued a (hastily withdrawn) ‘spoiler alert’ prior to the chancellor’s speech.
Overview
Most of us anticipated the 2025 Autumn Budget with a combination of trepidation and dread. Furthermore, we've had weeks of increased anxiety, fueled by intense media speculation, over proposed tax rises.
In time honoured tradition, we'll focus on those changes most likely to impact you and your business.
The 2025 Autumn Budget - Income tax allowances and rates
Personal allowances
We previously speculated the Government might restrict personal allowances. This would be a move designed to support their claim they had kept their manifesto promise.
Therefore, it came as no surprise that the freeze in personal allowances has been extended from 5 April 2028 to 5 April 2031. Whilst this will raise significant revenue for the Treasury, an unintended consequence is that more people will be caught by Self-Assessment. What's more, the transition to Making Tax Digital is a massive undertaking and this is bound to increase the pressure on HMRC.
Changes to property income
From 6 April 2027, there will be new separate tax rates for property income. The income tax rates for property income will be 22% for basic rate, 43% for higher rate and 47% for additional rate. Additionally, in line with these changes, tax relief for mortgage interest will increase from 20% to 22%
We also expect similar measures to be introduced by the devolved governments of Scotland and Wales. Arguably, yet another nail in the coffin for the property sector. Consequently the idea of individual property investment becomes less attractive, though it will reinforce stability in the residential property market
Changes to savings income
From 6 April 2027, the savings basic rate will increase to 22%. Savings on the higher rate will increase to 42% and the savings additional rate will increase to 47%. Yet another move to increase taxes on what is perceived as 'unearned' income.
Changes to dividend tax rates
From 6 April 2026, the rates for individuals increases by 2% to 10.75% for the dividend ordinary rate and 35.75% for the dividend higher rate. The additional rate will remain unchanged at 39.35%.
If you're a director/shareholder extracting profits personally from your company it will impact on the post tax profits available to draw down.
The 2025 Autumn Budget - Employment Taxes
Changes to Employee Car Ownership Schemes
Currently a car provided under an ECOS is not subject to tax as a company car benefit. This is because the ownership of the vehicle is transferred to the director or employee. Typically this will be arranged under a credit sale agreement.
Additionally, there's usually an arrangement for the employer to repurchase the car at an agreed point in time. The sale proceeds are then used towards the settling of the outstanding loan.
Consequently, a director or employee is taxed under the more favourable beneficial loan, rather than the company car benefit rules. Furthermore, because the vehicle is in the director's/employee’s name, they can claim business mileage allowances. These mileage allowances are frequently offset against their loan repayment.
However proposed changes will bring cars available under these schemes within the remit of the company car benefit rules. Originally these changes were designed to take effect from 6 April 2026. However, these have now been deferred until 6 April 2030. Presumably this is because of the government's concern these changes would have on the automotive industry.
Extension of workplace benefits relief
This change is aimed at reducing admin for employers. As a result, certain benefits-in-kind (BIKs), for example the cost of eye tests, can be reimbursed by the employer and the employee obtain the exemption.
Currently, the exemption only applies where your employer provides the benefit directly. This change now ensures reimbursements to employees are treated in the same way.
Easement for Plug-in hybrid electric vehicle (PHEV'S) company cars
This is a measure designed to mitigate the increasing benefit in kind tax liabilities of PHEV company cars which have changed due to new emission standards. Currently, it applies retrospectively from 1 January 2025 to 5 April 2028. However, transitional measures will apply to certain PHEVs until 5 April 2031.
Essentially, the CO2 emission figure for certain PHEVs will be treated as a nominal for calculating the benefit in kind charge. This will be used rather than the CO2 figure on the vehicle registration document. As a result this will reduce the benefit-in-kind charge that applies to drivers of PHEV company cars.
Salary sacrifice for pensions
There were concerns that the chancellor might impose further wide-scale restrictions on pensions tax relief - particularly for high earners using salary sacrifice arrangements.
Ultimately, the NIC exemption for pension contributions paid via salary sacrifice is being capped at £2,000. Although, this measure does not restrict the usual income tax exemption and will not take effect until April 2029.
However, currently it is not explicitly stated how these new measures will apply to director/shareholders. They often choose to make pension contributions as a tax effective method of profit extraction from their companies.
The 2025 Autumn Budget - Capital Gains Taxes
Share reorganistions
Currently, where there is a paper for paper exchange of shares resulting from a company reorganisation, any capital gain arising is rolled into the new shares. However, where the purpose of the transaction is to achieve a tax advantage, these reorganisation provisions will not apply.
These new rules apply to reorganisations on or after 26 November 2025. However, if a clearance application has already been submitted to HMRC by the above date the current rules apply. Additionally, they will also apply where either the shares are issued within 60 days of Budget Day, or the day that HMRC's decision resulting from the clearance application is issued.
Incorporation relief
Currently incorporation relief is automatic, providing all the conditions are met and any capital gains are 'rolled' into your company.
However from 6 April 2026, any incorporation relief will have to be claimed within your self assessment tax return. Therefore, as with share reorganisations, this adds up to increased scrutiny by HMRC. As a result, even greater care will be required when undertaking such transactions in future.
EIS and VCT shares
The main attraction for the enterprise investment scheme (EIS) is it offers income tax relief of 30% on investment, and CGT relief for gains. Additionally, CGT deferral is available when you invest in EIS qualifying shares.
Whilst those benefits for individual investors aren't changing, the gross asset capital limits for EIS/VCT qualification are.
As a result of the changes they have increased to £30m with effect for shares issued on or after 6 April 2026. The company’s lifetime investment limit will also be doubled to £24m, or £40m for knowledge-intensive companies.
Unfortunately, the income tax relief given at 30% for investors in VCT schemes is being cut to 20% for investments made on and after 6 April 2026. Whist the income tax relief on VCT's has is appealed to investors, they are also attracted by the reduced risk involved. This is because they spread their investment across a slate of different companies.
Additionally private investors benefit from tax free dividends on their investment. Although, there is an acceptance they are unlikely to realise a large gain on an eventual VCT share sale. However, perhaps the same could be said of EIS shares(!).
As a result, these changes might see an increased take up in EIS funds where the risk is spread. However whilst income tax relief is available on investment, they don't benefit from tax-free dividends in the short-term.
The 2025 Autumn Budget - Corporation Tax
Late filing penalties
Where the corporation tax filing date is after 1 April 2026 and a return is filed late the penalties will be as follows:
EMI share options
Currently, only companies with no more than 250 full time employees or £30m gross assets potentially qualify to issue EMI options.
However, these limits will now increase to 500 employees and £120m gross assets. Additionally, the maximum aggregate value of EMI options that can be granted by a company increases from £3m to £6m. Furthermore, the maximum holding period for an EMI option will increase from 10 to 15 years.
Consequently, the above changes will result in more companies fulfilling the EMI share option criteria and benefit those requiring significant funding and a longer timeline to exit.
The 2025 Autumn Budget - Capital allowances
Reduction in main writing down allowance
The rate of writing-down allowance (WDA) on the main pool of plant and machinery reduces from 18% to 14% per year. The new rate of WDA will be effective from 1 April 2026 for corporation tax and 6 April 2026 for income Tax.
New First Year Allowance
A new first-year allowance (FYA) of 40% for main rate expenditure, is being introduced. This is designed to encourage investment by those businesses unable to access enhanced allowances (for example full expensing). These changes also take effect from 1 April 2026 for corporation tax and 6 April 2026 for income Tax.
The 2025 Autumn Budget - Other measures
Crypto asset reporting framework
Given our tax expertise in the crypto space, this post wouldn't be complete without a mention of these rules. We've already posted about this previously however it's worth mentioning again.
Essentially, the rules which take effect from 1 January 2026 require exchanges to keep detailed records of all users on their platforms. The government seem determined to regulate the crypto space .Additionally, this could be regarded as a last chance saloon for any investors who have un disclosed crypto gains/income to report to HMRC.
Council tax surcharge
We won't dwell on this topic too much as the so called 'mansion tax' has already been the subject of mass speculation in the media.
A new council tax surcharge, will apply to properties valued at £2m or more. Moreover a flat amount will apply to four bands exceeding that value. These start at £2,500 for properties valued between £2m and £2.5m. The mansion tax will be capped at £7,500 for properties of over £5m.
Regardless of whether you agree or disagree with the concept of a 'mansion tax' this is a half-baked measure. Ultimately it won't raise significant amounts for the Treasury (approximately £400 million). Therefore, perhaps it's an example of the chancellor 'sending a message' and appeasing dissenting voices in the government.
Pay per mile for electric vehicles
The chancellor announced an additional electric vehicle excise duty (VED) of 3p a mile for fully electric cars or 1.5p for plug-in hybrids.
This has been coupled with a pledge to accelerate the rollout of public EV charging. In our experience this is woefully inadequate in the UK - though much easier in France or Spain. We'll be covering the changes to the tax treatment to electric vehicles separately at a later date.
Summary
This budget is perhaps not quite as bad as some feared it might be and we have selected what we consider to be some of the key changes. However, rest assured we will be covering more of these changes in the coming weeks and months.
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