November 2025 Newsletter | Cylchlythyr Misol Tachwedd 2025
BUDGET SPECIAL
1) Main headlines
a Removal of two child benefit cap for Universal Credit.
a Capital gains tax rates remain unchanged.
a Tax-free pension lump sum amounts and rates of income tax relief on pension contributions remain unchanged.
r Employer and employee NICs to be charged on salary sacrifice pension contributions over £2,000, but not until April 2029.
r Increase in income tax rates for property, savings & dividend income
r ISA allowances for cash ISAs to reduce to £12,000 from April 2027 (unless you are over 65).
Further to this list, we now assess some of the specific announcements in detail:
2) Individuals
- Income tax & National Insurance allowances frozen until April 2031 - individuals will pay more tax as wages rise above these allowances. For students, the Plan 2 student loan repayment threshold will be frozen until April 2030.
- From April 2026, dividend tax rates will increase from 8.75% and 33.75% to 10.75% and 35.75% for basic-rate and higher-rate taxpayers, respectively. This will affect investors, and those who work via their own limited company.
- From April 2027, 2% increase in tax rates on savings & property income. For example, if an individual earns £20,000 of savings or rental income, their tax bill will increase by £400.
- State Pension and Pension Credit to increase by 4.8% in April 2026 (increase of £575). Also, if you are a pensioner whose sole income is the basic or new State Pension, you will not need to pay any income tax on this State Pension from April 2027 onwards (this does not apply if you receive any other form of income, such as a workplace pension).
- ISA allowances for cash ISAs to reduce to £12,000 from April 2027. This means an individual would also need to pay £8,000 into their Stocks & Shares ISA to utilise the full £20,000 ISA allowance. Savers over 65 will continue to be able to put £20,000 in a cash ISA each year.
- Fuel duty frozen until August 2026, but will increase by 5p between September 2026 and March 2027. Also, a new 'Fuel Finder' scheme to be launched in 2026 to allow easier comparison of fuel prices.
- Electric Vehicle Excise Duty (eVED) to be introduced from April 2028. Drivers will pay based on their mileage at a rate of 3p per mile, alongside their existing VED. For someone who drives 10,000 miles per year, this equates to a charge of £300.
- Alcohol duty to increase in line with RPI inflation from February 2026; new duty on vapes from October 2026 of £2.20 per 10ml vaping liquid, with further increases in tobacco duty.
3) ASSET TAXES
- Individual tax-free allowance for inheritance tax (including the nil rate band) frozen until April 2031. As asset prices rise, more estates will be captured by inheritance tax.
- As previously announced, from April 2026, Agricultural Property Relief and Business Property Relief only available on the first £1,000,000 of assets, with 50% relief thereafter.
However, announced today, the £1,000,000 allowance will now be transferable between spouses and civil partners. This will be a significant help for smaller farms and businesses.
4) BUSINESS
- Corporation tax rate kept at 25%, with the smaller company rate also maintained at 19%.
- Reduction in the tax relief from main rate writing-down allowances from 18% to 14% from April 2026.
5) OTHER ANNOUNCEMENTS
- As previously announced at the last Budget, the capital gains tax rate for Business Asset Disposal Relief will increase to 18% from April 2026.
- Premium cars under the Motability scheme will be excluded, as well as overseas breakdown cover, while the lease mileage limit will also be reduced.
- Late submission penalties will not apply during the 2026-2027 tax year for Making Tax Digital submissions. This is excellent news as millions of taxpayers transition to the new HMRC tax system next year.
- Inflation expected to fall to 2% target by early 2027, potentially leading to a cut in interest rates at that time.
We will continue to keep you updated on significant tax changes and Government announcements!
