Autumn Budget 2025
The Chancellor, Rachel Reeves, delivered her Autumn Budget today. Please find a breakdown of the key measures affecting Individuals, Sole Traders, and Limited Companies below.
SECTION 1: Impact on Individuals & High-Net-Worth Clients
The main burden on individuals comes from the continuation of the allowance freezes, which effectively increases the tax paid on rising wages.
| Tax Measure | New/Extended Threshold or Rate | Effective Date | Strategic Impact |
| Income Tax Thresholds (FREEZE) | Frozen at current levels: Personal Allowance £12,570, Higher Rate Threshold £50,270, and Additional Rate Threshold £125,140. | Extended until April 2031 | This extension is the largest tax-raising measure. It will drag millions more people into paying Income Tax, and is causing what is known as the “fiscal drag” |
| Dividend Income Tax Rates | Increased by 2% across all bands. | To be confirmed (Likely April 2026) | This impacts investors and, crucially, directors who extract profit via dividends. The Basic Rate will rise from 8.75% to 10.75%, and the Higher Rate will rise from 33.75% to 35.75%. |
| Savings Income Tax Rates | Increased by 2% across all tax bands. | To be confirmed (Likely April 2026) | This applies to interest income received outside of ISAs, raising the tax bill for basic and higher-rate taxpayers whose interest exceeds the Personal Savings Allowance. |
| Cash ISA Allowance | Reduced from £20,000 to £12,000 per year. | From April 2027 | This cut applies to savers under the age of 66. This measure aims to push younger savers toward investment (Stocks & Shares ISAs, which retain the £20,000 limit). |
| Pension Tax-Free Lump Sum | No Change | N/A | Rumours of capping the 25% tax-free lump sum have not been confirmed. |
| New Property Levy | Council Tax Surcharge on homes valued over £2 million. Tiered rates apply (e.g. £2,500 to £7,500 annually). | From April 2028 | This is a new wealth-related tax on high-value properties. |
SECTION 2: Impact on Sole Traders & Landlords
Sole traders are primarily affected by the personal tax freezes and the new taxes on property income.
| Tax Measure | Change Announced | Effective Date | Strategic Impact |
| Income Tax/NI Thresholds | Freeze Extended. | Until April 2031 | Self-employed individuals are fully exposed to “fiscal drag.” As trading profits increase with inflation, a larger proportion of their income is taxed at the 40% Higher Rate. |
| Property Income Tax | Rates Increased by 2%. | To be confirmed (Likely April 2026) | Sole trader landlords will pay 2% more tax on their rental profits. This further squeezes profitability in the private rental sector. |
| VAT Registration Threshold | Remains Frozen at £90,000. | No Change | The freeze is maintained. Growing sole traders are still being dragged into the VAT system prematurely, increasing administrative burden and complexity. |
| Fuel Duty | Extended Freeze | Until September 2026 | The 5p cut in Fuel Duty is maintained, offering a small respite on operational vehicle costs. |
SECTION 3: Impact on Limited Companies & Director Planning
The Budget targeted key tax reliefs, increasing the cost of certain popular remuneration and investment strategies.
| Tax Measure | Change Announced | Effective Date | Strategic Impact |
| Director Dividends | Tax Rates Increased by 2%. | To be confirmed (Likely April 2026) | We can review your individual situation and whether you’ll be best on a salary and dividend split income or through a normal salary. |
| Salary Sacrifice Pensions | NI Exemption Capped. | From April 2029 | National Insurance relief on contributions will only apply to the first £2,000 per year. Above this cap, contributions will be subject to NICs. This reduces the NI benefit for both the employer and high-earning employees. |
| Writing Down Allowance (WDA) | Main Rate Reduced. | To be confirmed (Likely April 2026) Potentially 15-16% | The WDA rate for plant and machinery will be reduced. This slows down the rate at which businesses can claim tax relief for long-term capital investment. |
| First year allowance and Annual Investment Allowance | No Change | Permanent | The 100% deduction for qualifying plant and machinery investment remains permanent, continuing to encourage high levels of capital expenditure. |
| Electric Vehicles (EV) | New Mileage-Based Charge Introduced. | From April 2028 | EVs and Plug-in Hybrids will face a pence-per-mile tax (e.g., 3p/mile for BEVs). However, the ultra-low Benefit-in-Kind (BiK) rates for company cars remain intact (e.g., 3% for 2025/26), preserving the main tax benefit for corporate fleets. |