Autumn Budget 2025 – Main tax announcements

This blog discusses some of the key tax changes announced in this week's Autumn Budget 2025.

The Chancellor, Rachel Reeves, delivered the Autumn Budget 2025 on Wednesday 26 November. As with last year, some of the measures announced had been well-trailed and speculation had been intense for a number of months. In the end, we have been served with a broad range of targeted measures, with headline-grabbing big announcements noticeably absent.

The main tax announcements made by the Chancellor are summarised below. 

If you would like further information on any of these announcements, please contact the Tax team.

1. Business & Corporate Taxes

1. Business rates – From 1 April 2026, business rates will be reduced for 750,000 retail, hospitality and leisure properties, which will be funded by an increase on premises worth more than £500,000 (such as warehouses used by large online companies).
2. Capital allowances: the main rate of writing-down allowances will be reduced from 18% to 14% from April 2026. A new 40% first-year allowance for companies will be introduced from January 2026.
3. Cross Border VAT grouping: with immediate effect the UK VAT treatment relating to operating cross border VAT grouping has reverted to the UK’s previous position (i.e. an overseas establishment of a business VAT grouped in the UK should be treated as part of that VAT group - such that intra-group charges would be outside the scope of VAT - even when located in an EU member state that does not operate whole entity VAT grouping.).
4. Construction Industry Scheme: from 6 April 2026, in a strengthening of HMRC's powers, businesses may lose their CIS gross payment status, be hit by a 30% penalty, and be assessed for any tax loss if involved with fraudulent evasion of tax.
5. CGT anti-avoidance (share exchanges and reorganisations): the anti-avoidance provisions that apply to share exchanges and company reorganisations will be widened with immediate effect, in two ways. (1) taxpayers with a shareholding of 5% or below will now seemingly have to consider these provisions. (2) the anti-avoidance provisions can be engaged if only one component of a  scheme or arrangement has a tax avoidance main purpose.
6. UK Listing Relief (SDRT): from 27 November 2025, transfers of a UK company’s securities will be subject to relief from the 0.5% SDRT charge for three years from the point the company lists on a UK regulated market (though not where there is a change of control on any such transfer).
7. Modernisation of Stamp Duties: legislation will be included in Finance Bill 2025-26 to introduce a power allowing regulations that enable the testing of the new digital service for the Securities Transfer Charge, which will replace Stamp Duty and SDRT as part of the modernisation of the stamp duties regime.
8. Reform of transfer pricing, permanent establishment and Diverted Profits Tax: the government will legislate to simplify the UK tax rules around related party transactions, non-resident companies trading in the UK, and profits diverted from the UK, for chargeable periods beginning on or after 1 January 2026.
9. Advance Tax Certainty Service: a new service to provide major investment projects with advance tax certainty will be launched in July 2026.

2. Business Incentives & Investment Schemes

1. EMI company eligibility expansion: in a move to increase the number of businesses that can qualify for EMI treatment, from 6 April 2026, the employee limit for EMI option schemes will be increased to 500 (from 250), the gross assets test to £120m (from £30m), and the company share option limit to £6m (from £3m). The maximum EMI holding period will increase to 15 years (from 10 years). The EMI notification requirement will also be removed from April 2027.
2. EMI / CSOP and Private Intermittent Securities and Capital Exchange System (PISCES) reform: existing EMI and CSOP share options will be able to be amended to include PISCES as an exercisable event., with changes to take effect retrospectively from 15 May 2025.
3. Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS): from 6 April 2026, the VCT and EIS company investment limits are being increased to £10m, and £20m for Knowledge Intensive Companies (KICs), and the lifetime company investment limit increased to £24m, and £40m for KICs. The gross assets test will also increase to £30m (from £15m) before share issue, and to £35m (from £16m) after. The upfront VCT income tax relief is, however, reducing from 30% to 20%.
4. Tax support for entrepreneurs: the government has published a Call for Evidence that seeks views on the effectiveness of existing tax incentives, and the wider tax system for business founders and scaling firms, and how the UK can better support these companies to start, scale and stay in the UK. The Call for Evidence will close on 28 February 2026.
5. Tax offer for high-talent new arrivals: the government will explore how to further develop its tax offer for high-talent new arrivals with the stated aim to make the UK a competitive destination for growth-driving global talent. The government will seek views in due course to inform the design and scope of any potential enhanced offer.
6. R&D advance assurance service: the government will pilot a targeted advance assurance service from spring 2026, enabling small and medium-sized enterprises to gain clarity on key aspects of their R&D tax relief claims before submitting to HMRC.
7. Employee ownership trusts: with immediate effect the amount of CGT relief on share disposals to EOT trustees has been restricted. Rather than 100% of the gain being relieved, 50% of the gain will be chargeable to 50% with the remaining 50% of the gain being held-over (coming into charge on future disposals of the shares by the EOT trustees).

3. Personal Taxes

1. Income Tax Personal Allowance and thresholds: the income tax personal allowance (£12,570), higher-rate threshold (£50,270) and additional-rate threshold (£125,140) will each be frozen to April 2031.
2. National Insurance contributions thresholds: the NICs Primary Threshold, Lower Profits Limit, Upper Earnings Limit, Upper Profits Limit and Secondary Threshold will each be frozen to April 2031.
3. Dividend income: from 6 April 2026, taxes on dividend income will be increased such that the ordinary rate will be increased to 10.75% and the upper rate will be increased to 35.75% (a 2% increase in each case). The additional rate will remain unchanged at 39.35%.
4. Savings income: from 6 April 2027, taxes on savings income will be increased such that the basic rate will be increased to 22%, the higher rate will be increased to 42% and the additional rate will be increased to 47% (a 2% increase in each case).
5. Salary sacrifice for pension contributions: from 6 April 2029, employer and employee NICs will be charged on pension contributions above £2,000 per annum made via salary sacrifice.
6. Non-resident dividend tax credit – From 6 April 2026, the dividend tax credit for non-UK residents with UK income will be abolished, aligning their treatment with UK residents. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2026.

4. Property Taxes

1. High Value Council Tax Surcharge: from April 2028, a new High Value Council Tax Surcharge for owners of residential property in England worth £2 million or more will be introduced. Local authorities will collect this revenue on behalf of central government. The annual charge will be £2,500 and (for property worth above £5m) £7,500.
2. Property income: from 6 April 2027, separate tax rates for property income are being created. The property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%. These rates will apply across England, Wales and Northern Ireland. As a result, from that date the non-resident landlord scheme rate of withholding will be 22%.