Following on from the £40bn of tax rises in the Chancellor’s first Autumn Budget last year, it’s fair to say that the nation fully anticipated another round of tax increases to be announced today, estimated to be in the region of a further £30bn.

However, despite intense media speculation, and what felt like mixed messages being floated by the Treasury, including whether the government was preparing to break its Manifesto pledge not to increase income tax, NI, or VAT, we still didn’t really know what changes to expect. This has led to widespread uncertainty and nervousness over what’s been an extended pre-Autumn Budget window.

All has now been revealed, and in fact was leaked just before the Chancellor’s Budget speech when the OBR Growth Forecast document was mistakenly published early.

As predicted, the government announced: a planned levy on all properties worth more than £2m during today’s Budget, and under new rules which will be introduced from 2029; a £2,000 cap on the national insurance exemption for salary sacrifice pension contributions; and removal of the two-child benefit cap from April 2026.

Given recent media headlines, we also expected an extended personal tax allowance threshold freeze. Indeed, the Chancellor confirmed that thresholds will remain frozen for a further three years, keeping bands static, until 2031. 

Another expected change was the reduction in the cash ISA limit to £12,000 from April 2027, intended to help drive growth in stock market investments, but with the news that over-65s will still retain the full and existing £20,000 cash ISA allowance.

However, there is widespread relief that there is no change to pensions tax relief (not counting the salary sacrifice changes), or a cut to pensions tax-free cash.

All in all, today’s announcements will result in a total package of £26bn in tax rises by 2029/30 with tax-to-GDP ratio forecast to increase to an all-time high of 38.3 per cent of GDP by 2030-31.

This is a roundup of announcements that may be useful (or interesting). All information is lifted directly from Autumn Budget-related documents published by the government (relevant links below), including the government’s Autumn Budget 2025 ‘Red Book’.

Headlines

• Income tax and National Insurance Contributions (NICs) thresholds: The freeze in income tax and NIC thresholds will be extended by three years until the 2031-32 tax year.
• Changes to salary sacrifice: From April 2029, salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance.
• Individual Savings Accounts, Lifetime ISA, Junior ISA: Cash ISA limit will be reduced from £20,000 to £12,000 for under 65’s from April 2027.
• Lifetime ISA Reform: The government will publish a consultation in early 2026 on the implementation of a new, simpler ISA product to support first time buyers to buy a home. Once available, this new product will be offered in place of the Lifetime ISA.
• Changes to tax rates for property, savings & dividend income: Includes a 2% increase in tax on dividend income from April 2026, and a 2% increase on tax on savings income across all bands from April 2027. Separate income tax rates for property income. Income tax rules will change so that reliefs and allowances will only be applied to property, savings and dividend income after they have been applied to other sources of income.
• Inheritance tax thresholds: Will stay fixed at current levels for a further year until April 2031. The forthcoming combined allowance for the 100% rate of agricultural property relief and business property relief will also be fixed at £1 million for a further year until 5 April 2031.
• State Pension: Pensioners whose sole income is the basic or new State Pension without any increments will not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point.
• High Value Council Tax Surcharge: A new charge on owners of residential property in England worth £2 million or more, starting in 2028-29 of: £2,500 for properties worth more than £2m, and £7,500 for properties worth more than £5m.
• National Living Wage and National Minimum Wage: From 1 April 2026, the National Living Wage will increase by 4.1% to £12.71 per hour. The National Minimum Wage for 18–20-year-olds will also increase by 8.5% to £10.85 per hour and for 16–17-year-olds and apprentices by 6.0% to £8.00 per hour.
• Electric Vehicles: A new mileage-based charge is to be introduced on electric cars from April 2028. The charge will be 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrid cars. This is roughly equivalent to half the rate of fuel duty tax paid per mile by drivers of petrol and diesel vehicles.
• Gambling Taxes: From April 2026 there will be an increase in remote gaming duty from 21% to 40%. From April 2027, a new rate of general betting duty for remote betting will be introduced at 25%. Bingo Duty is to be abolished. By 2031 these will raise over £1bn per year.
• Reduction in VCT income tax relief: The government is reducing the upfront VCT Income Tax relief from 30% to 20% from April 2026.

National Insurance and Personal tax

Personal tax and NI thresholds

The government is maintaining personal tax thresholds and the National Insurance contributions (NICs) thresholds from 2028 until 2031 and the Plan 2 student loan repayment threshold from 2027-28 until 2029-30.

Married Couple’s Allowance and Blind Person’s Allowance

The government will uprate the Married Couple’s Allowance and the Blind Person’s Allowance by the September 2025 CPI rate of 3.8%. This will be legislated for through a Treasury Order and take effect from 6 April 2026.

Non-reimbursed employment expenses for homeworking

The government will remove the deduction from Income Tax for non-reimbursed home working expenses. Employers can still reimburse employees for these costs where eligible without deducting Income Tax and National Insurance contributions. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2026.

Tax on dividend income

Tax on dividend income will increase by 2 percentage points. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75% from April 2026. The additional rate will remain unchanged at 39.35%. All taxpayers benefit from a dividend allowance which allows individuals to earn up to £500 of dividend income each tax year.

Non-resident dividend tax credit

The government will abolish the dividend tax credit for non-UK residents with UK income, aligning their treatment with UK residents. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2026.

Tax on savings income

Tax on savings income will increase by 2 percentage points across all bands. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027.

Personal Savings Allowance

Basic Rate taxpayers can receive £1,000 of interest without paying tax, and Higher Rate taxpayers can receive £500 without paying tax.

Changes to tax rates for property income

The government is creating separate tax rates for property income. Income tax is already charged on property income. These separate rates mean property income will have its own individual tax rates (as already occurs for the taxation of savings and dividend income). From April 2027, the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. Finance cost relief will be provided at the separate property basic rate (22%). Property income of more than £1,000 they can benefit from either using the tax-free £1,000 property allowance or deducting relevant expenses.

Income tax rules will change so that reliefs and allowances will only be applied to property, savings and dividend income after they have been applied to other sources of income.

Capital Gains Tax

The government is restricting Employee Ownership Trust Capital Gains Tax relief from 100% to 50%.

The government will modernise the anti-avoidance provisions that apply to share exchanges and company reorganisations with immediate effect. This will be legislated for in Finance Bill 2025-26.

The government will amend non-resident capital gains tax rules, closing loopholes for protected cell companies and clarifying legislation for investors. Changes apply with immediate effect, with further administrative reforms from 6 April 2026. This will be legislated for in Finance Bill 2025-26.

The government is implementing previously announced reforms to taxes on wealth and assets including, that from 6 April 2026, the CGT rate for Business Asset Disposal Relief and Investors’ Relief will increase to match the main lower rate at 18%.

Inheritance Tax (IHT)

Inheritance tax thresholds

The inheritance tax nil-rate bands are already set at current levels until April 2030 and will stay fixed at these levels for a further year until April 2031. The forthcoming combined allowance for the 100% rate of agricultural property relief and business property relief will also be fixed at £1 million for a further year until 5 April 2031. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2030.

The £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable between spouses and civil partners. The government will also make changes to the way internationally mobile individuals are taxed, closing loopholes and capping relevant property trust charges payable by certain trusts.

IHT on pensions

The government will continue with the implementation of previously announced reforms to taxes on wealth and assets including, from 6 April 2027, the removal of the opportunity for individuals to use pensions as a vehicle for IHT planning by bringing unspent pots into the scope of IHT. The government is announcing further changes to ensure that these policies are implemented effectively.

The government announced at Budget 2025 new features of the process for IHT to support personal representatives to effectively administer estates containing pensions. If personal representatives reasonably expect IHT to be due, they can direct pension scheme administrators to withhold 50% of the taxable benefits for up to 15 months from the date of death. Personal representatives can then direct pension scheme administrators to pay the IHT due to HMRC before releasing the rest of those benefits to pension beneficiaries. If the instruction is withdrawn or the period ends, the remaining funds can be paid out. This will not apply to exempt benefits, funds under £1,000, or continuing annuities. Personal representatives will also be discharged from liability for pensions discovered after they have received clearance from HMRC. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2027.

Pensions and Pensions tax

Changes to salary sacrifice arrangements for pension contributions

The government is capping the amount of an individual’s salary (or bonus) that can be sacrificed for pension contributions without paying NICs at £2,000 per employee from 2029, protecting lower earners, while retaining generous tax relief on pension contributions in full.

The government will charge employer and employee NICs on pension contributions above £2,000 per annum made via salary sacrifice. These changes will be legislated for through primary and secondary legislation which will be introduced in due course.

This approach to controlling costs means that employees who contribute up to £2,000 into their pension each year via salary sacrifice can continue to benefit in full, but employee and employer NICs will be charged in the usual way on the amount above £2,000 for the minority of those who contribute above this. 

Enabling defined benefit (DB) pension scheme surplus payments to scheme members

The government will enable well-funded DB pension schemes to pay surplus funds directly to scheme members over the normal minimum pension age, where scheme rules and trustees permit it, from April 2027.

Defined Benefit pensions – inflation protection for pre-1997 pensions in the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS)

The government will help protect members of the PPF and FAS from the impact of inflation by introducing CPI-linked increases, capped at 2.5% a year, on pre-1997 pension accruals where their original schemes provided this benefit, from January 2027. This will help ensure members’ pensions keep pace with the cost of living.

Collective Money Purchase (CMP)

The government will enable unconnected, multiple employer CMP schemes to apply to HMRC to become a registered pension scheme and allow HMRC to refuse to register or to de-register an unauthorised CMP scheme. The government will also take a regulation-making power to allow HMRC to legislate for CMP schemes more efficiently in the future

State Pension Age review

The government is taking action to improve the sustainability of public spending, including by: launching the third independent review of State Pension age and a new Pensions Commission to help build a strong, fair and sustainable pension system that is fit for the future.

Basic State Pension and triple lock

The government will support the incomes of over 12 million pensioners through its commitment to the Triple Lock for the duration of this Parliament. The basic and new State Pension will be increased by 4.8%, from April 2026, in line with average weekly earnings up to an additional £575 per year to pensioners, depending on their entitlement.

The Pension Credit Standard Minimum Guarantee will also be uprated by 4.8% from April 2026.

Modernising the tax system

State Pension and Simple Assessment – The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year.

Voluntary National Insurance contributions (NICs) abroad

From 6 April 2026, the government will remove access to pay voluntary Class 2 NICs abroad and increase the initial residency or contributions requirement to pay voluntary NICs outside of the UK to 10 years. These changes will be made via secondary legislation laid before Parliament ahead of April 2026. The government will also launch a wider review of voluntary NICs with a call for evidence in the new year.

British Coal Staff Superannuation Scheme (BCSSS)

The government will transfer the Investment Reserve Fund in the British Coal Staff Superannuation Scheme to the scheme’s Trustees. This will be paid out as an additional pension to members of the scheme.

Savings

Starting Rate for Savings

The Starting Rate for Savings will be retained at £5,000 for 2026-27 and will stay at this level until 5 April 2031, allowing individuals with less than £17,570 in employment or pensions income to receive up to £5,000 of savings income tax-free.

ISA Reform

From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000. Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031. Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year. In addition, financial services firms will be providing new, easily navigable ways for people to find the right UK investment for them.

Lifetime ISA Reform

The government will publish a consultation in early 2026 on the implementation of a new, simpler ISA product to support first time buyers to buy a home. Once available, this new product will be offered in place of the Lifetime ISA.

EMI, VCT and EIS

The government is significantly increasing the company eligibility limits for the Enterprise Management Incentives scheme (EMI) to allow scale-ups to join start-ups in offering tax-advantaged shares to the talent they need to grow. The government is also increasing the Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) limits to allow investors to follow-on as companies grow beyond the start-up phase. To better balance the amount of upfront tax relief offered by VCTs compared to the EIS and incentivise funds to support high-growth companies, the government is reducing the upfront VCT Income Tax relief from 30% to 20%

Stamp duty on share purchases

From 27 November, transfers of a company’s securities will be subject to relief from the 0.5% Stamp Duty Reserve Tax charge for three years from the point the company lists on a UK regulated market.

Property taxation

The High Value Council Tax Surcharge (HVCTS)

This, so called ‘mansion tax’, is a new charge on owners of residential property in England worth £2 million or more in 2026, taking effect in April 2028. This will be administered alongside existing Council Tax by Local authorities, who will collect this revenue on behalf of central government.

High Value Council Tax Surcharge charging structure.

Corporate and Business Tax

Digital prompts for VAT and Corporation Tax

The government will invest £59 million in new technology over the next five years to provide taxpayers with real-time digital prompts for VAT filing software from April 2027, and Corporation Tax filing software from April 2028. 

E-invoicing

The government will require all VAT invoices to be issued in a specified electronic format from April 2029. The government will work with stakeholders to develop an implementation roadmap to be published at Budget 2026.

Increases to Corporation Tax late filing penalties

The government will double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026. This will be legislated for in Finance Bill 2025-26.

Business rates

From 1 April 2026, business rates bills in England will be updated to reflect changes in property values since the last revaluation in 2023. As a result of the revaluation, the small business multiplier will decrease from 49.9p in 2025-26 to 43.2p in 2026-27, and the standard multiplier will decrease from 55.5p to 48p.

Business rates retail, hospitality and leisure multipliers (RHL)

From 1 April 2026, the government is introducing two permanently lower business rates multipliers for eligible RHL properties with rateable values below £500,000. These rates will be 5p lower than the national multipliers, making the small business RHL multiplier 38.2p in 2026-27 and the standard RHL multiplier 43p in 2026-27.

Business rates high value multiplier

From 1 April 2026, the government is introducing a high-value business rates multiplier for properties with rateable values of £500,000 and above 2.8p above the national standard multiplier, making the high-value multiplier 50.8p in 2026-27.

Call for Evidence: Business rates and investment

The government is publishing a Call for Evidence at Budget on the role business rates play in investment. It also seeks feedback on the impact of the Receipts and Expenditure valuation method on investment.

VAT

No general increase to VAT rates, as per Labour’s manifesto promise.

Tax Administration

Penalty reform: Updates to the penalty regime for Self-Assessment and VAT

The government will not apply late submission penalties for quarterly updates during the 2026-27 tax year for Income Tax Self-Assessment (ITSA) taxpayers required to join Making Tax Digital (MTD). The government will apply the new penalty regime for late submission and late payment to all ITSA taxpayers not already due to join the new system from 6 April 2027. This will be legislated for via secondary legislation. The government will increase the penalties due for late payment of ITSA and VAT from 1 April 2027. This will be legislated for via secondary legislation.

Other announcements

Increase in the National Living Wage

From 1 April 2026, the National Living Wage will increase by 4.1% to £12.71 per hour. The National Minimum Wage for 18–20-year-olds will also increase by 8.5% to £10.85 per hour and for 16–17-year-olds and apprentices by 6.0% to £8.00 per hour. The accommodation offset will increase by 4.1% to £11.10 per day. The 6.7% increase, which is worth £1,400 a year for an eligible full-time worker, will impact over 3 million workers next year.

The National Minimum Wage for 18 to 20-year-olds will also rise will rise by £1.40 per hour from £8.60 to £10.00 an hour and marks a first step towards a single adult rate.

Youth Guarantee and Growth and Skills Levy

The government is making available more than £1.5 billion for additional employment and skills support, and the Growth and Skills Levy, over the spending review period. This will ensure young 98 Budget 2025 people have access to high-quality training opportunities and the support they need to earn or learn, alongside measures to simplify the apprenticeship system and make it more efficient. Further details will be announced shortly. 

Youth Guarantee: Jobs Guarantee scheme

The government will guarantee a six-month paid work placement for every eligible 18–21-year-old who has been on Universal Credit and looking for work for 18 months. This will cover 100% of employment costs for 25 hours a week at the relevant minimum wage, and additional wraparound support.

Removal of the two-child benefit cap

The Government has removed the two-child limit within Universal Credit (UC) from April 2026. The limit restricted the UC child element, which is currently £3,500 per year for second and subsequent children, to two children per family apart from children born prior to 6 April 2017 and those who meet certain exemption criteria. Its removal costs £2.3 billion in 2026- 27 and £3.0 billion in 2029-30 (Table 3.2).9 This includes £300 million by 2029-30 for the cost of an estimated 25,000 additional entitled families making a UC claim as a result of the increase in benefit generosity. 

The Government estimates that this measure will reduce child poverty by 450,000 by 2029-30, relative to the level had the two-child limit remained in place.

Alcohol duties

Alcohol duty will be uprated with the RPI on 1 February 2026 to maintain its current real-terms value. 

Electric Vehicle Excise Duty (eVED)

The government is introducing Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, with effect from April 2028. Drivers will pay for their mileage on a per-mile basis alongside their existing Vehicle Excise Duty. Electric cars will pay half the equivalent fuel duty rate for petrol and diesel cars, and plug-in hybrid cars will pay a reduced rate equivalent to half of the electric car rate. The government has published a consultation which provides further detail on how eVED will work and seeks views on its implementation. The consultation will remain open until 18 March 2026.

Fuel Duty

The government is extending the 5p fuel duty cut until the end of August 2026, with rates then gradually returning to March 2022 levels by March 2027. The planned increase in line with inflation for 2026-27 will also be cancelled.

Tobacco and vaping

At Autumn Budget 2024, the government confirmed a flat-rate excise duty at £2.20 per 10ml on all vaping liquid which will come into effect from 1 October 2026. The government also set out a path for uprating tobacco duties by Retail Prices Index (RPI) +2%. Duty rates on all tobacco products will increase by RPI inflation +2 ppts. These changes will take effect from 6pm on 26 November 2025. The one-off increase of £2.20 per 100 cigarettes or 50g of other tobacco products and annual uprating of tobacco duty by RPI + 2 ppts next year will take effect from 1 October 2026 and will be included in Finance Bill 2025-26.

Freezing NHS prescription charges

NHS prescription charges in England will be frozen in 2026-27 with the cost of a single prescription remaining at £9.90.

Air Passenger Duty (APD) rates

The government will uprate all rates of Air Passenger Duty in line with RPI from 1 April 2027. These rates will be rounded to the nearest penny.

Legislation

As usual, the Chancellor's Budget statement will include resolutions made under the Provisional Collection of Taxes Act 1968 for any measures that are expected to come into effect ahead of a Finance Bill gaining Royal Assent. Therefore, once the House of Commons has agreed the Budget Resolutions, required changes will be included in the new Finance Bill, or implemented by Treasury Order.

Links to further information

• Link to main Treasury news web page
• Autumn Budget 2025 ‘Red Book’
  
• Link to Budget documents page
  
• OBR Economic and fiscal outlook
  
• Changes to salary sacrifice for pensions from April 2029
  
• High Value Council Tax Surcharge
  
• Changes to tax rates for property, savings & dividend income
  
• House of Commons Library