Please note that we will update this as more information becomes available.
Employers National Insurance
The biggest tax raising measure in the budget is the changes to Employer’s National Insurance.
Employer's National Insurance is your contribution as an employer towards your employee's national insurance. Currently, you pay 13.8% of the value of their wages over £9,100 in taxes, but this will rise to 15% of their wages and the threshold will be lowered to £5000.
The implication here is that it will cost more for employers to employ new members of staff and so could mean employers employ less staff, pass on the rise in higher prices or don’t raise staff wages as much.
However, the government have tried to alleviate this for small businesses by raising the Employment Allowance from £5000 to £10,500 which means that you don’t have to pay the first £10,500 of Employers National Insurance per year (the government cover your contribution instead). This may mean smaller employers actually seeing a reduction in the contributions they pay but for larger companies it will mean a rise in taxes.
There was previously a limit on who could claim the Employment Allowance and this has now been removed too so medium and larger employers will be allowed to claim it.
As Employer National Insurance is also a tax-deductible expense, the cost of the rise will also be partly offset by lower corporation tax or the tax you pay in your self-assessment. Where the employees are part of research and develop, the Employers NI is also fully deductible.
National Living Wage
The Chancellor announced a rise in the National Living Wage (the minimum wage level for employees) from April 2025.
New Rates per Hour -
- 21 and over - £12.21 per hour
- 18 - 20 year olds - £10 per hour
- 16 - 17 year olds - £7.55 per hour
- Apprentices under 19 (or over 19 but in first year of apprenticeship) - £7.55 an hour.
They plan over time to move towards a single minimum wage rate for everyone.
Transport and Fuel Duty
Fuel Duty will remain frozen for 2025-26.
This will mean fuel prices for driving cars, vans or lorries will remain lower than otherwise would have been the case in that year.
The £2 cap on bus journeys will be extended by another year (to Dec 2025) but the cap will rise to £3 (but London and Greater Manchester remain the same as they were due to a different type of funding).
Air Passenger duty will rise to take account of below inflation increases in recent years. Air Passenger duty on private jets will increase 50%.
Rail fares will rise 4.6% from March and the price of railcards will rise by £5.
The current tax reliefs for electric vehicles will be maintained and the first year 100% tax relief will be extended for another year for buying electric cars and putting in charging points.
Capital Gains Tax and Stamp Duty
Capital Gains Tax is the tax paid when you sell an asset such as your business, car, rental property or shares.
The capital gains taxes will rise from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. This change happens immediately.
When you sell your business, you can apply for a tax relief called “Business Asset Disposal Relief” (previously known as Entrepreneur’s Relief). This is usually set at the basic rate of capital gains tax but is going to be increased in stages instead of straight away. It will rise to 14% in 2025-26 and then 18% in 2027-28.
The implication of this is that if you have any assets or want to sell your business, it will be more tax-efficient to do this before April next year (but there isn’t any tax benefit from selling rental property quicker).
However, private equity fund managers will pay an increased Capital Gains Tax of 32% on carried interest.
Stamp Duty Land Tax surcharge on second homes, buy-to-let homes and companies purchasing residential properties will increase to 5% immediately.
The thresholds at which Stamp Duty is paid will also be lowered back to their previous levels (£125,000 for most people or £300,000 if you are a first-time buyer) from April which means it will be more expensive to buy or sell a house.
If your business purchases a building worth over £500,000, then the stamp duty will rise from 15% to 17% on that purchase.
Corporation Tax and Investment Reliefs
The main rate of Corporation Tax for businesses with profits over £250,000 will remain capped at 25% until the next election.
Full expensing will also continue as will the £1 million Annual Investment Allowance.
The implication here is that in most cases, whatever capital items you buy in your business can be claimed fully against taxes in the year you purchased them instead of being claimed over a period of time.
The Research and Development tax reliefs will also be maintained.
The government hopes this will enable businesses to plan long-term and invest more as they can be certain of what the tax levels will be over the next 5 years.
The levy on the profits of large energy companies will increase to 38% and this will be extended until March 2030. Some of the investment reliefs will also be removed.
Business Rates
Businesses in the retail, hospitality and leisure sectors will have a lower business rates multiplier (meaning lower business rates to pay) but businesses with the most valuable properties will have a higher one from 2026 - 27. In 2025 - 26 the small business multiplier will be frozen but the 75% discount will be reduced from 75% to 40%.
Changes for LLP’s closing down
Currently, when a partner contributes an asset to the LLP there are no chargeable gains for capital gains tax as it’s treated as being held by partners in a normal partnership and then can be returned to the partner when the LLP closes down with no tax implication. This will change now so that when the LLP closes down and the asset is given back to the partner, it will be deemed that a disposal of the asset has occurred and they will be taxed on any gains made before the asset was contributed to the LLP.
IR35 and Umbrella Payroll
If you are a contractor using an umbrella company, responsibility for payroll will move from the Umbrella company to the recruitment agency or the end client business from April 2026.
Employee Benefits in Kind
If you provide benefits to your employees/ directors such as health insurance, company car, loans, perks or incentives, presents e.t.c, these are called benefits in kind and must be reported each year to HMRC on a P11d form. However, from April 2026, these will also need to be reported on a monthly basis through your payroll software too.
Self Assessment
From April 2026 you will be able to make voluntary installments of payments towards your self-assessment tax bill through the HMRC app.
Savings
The savings limit on ISA’s will remain at £20,000 until 2030, and the planned £5000 top-up allowance for the British ISA will be scrapped.
Income Tax, Employee National Insurance and VAT
There will be no changes to these levels.
Personal Tax Thresholds (the point at which you start paying tax)
These were originally frozen till 2028, and the government has announced that this will remain the case. From 2028 they will start to rise again by inflation meaning you can earn more before paying tax from 2028 onwards.
Child Benefit Charge
If you have income above £50,000 then it has been the case that you lost child benefit. In the previous budget the threshold was raised to £60,000 and this will still go ahead.
However, the plan to move to looking at total household income (because in some cases you would have a situation where a one-earner household earns say £65,000 and loses the child benefit, but another household has two earners each getting £55,000 i.e. £110,000 cumulatively, and they don’t lose it) has been scrapped.
VAT on Private School fees
VAT will start being charged on private school tuition fees from January 2025 and rates relief will also be removed from April 2025. This will mean it is more expensive to send your child to private school.
Inheritance Tax
The £325,000 threshold has been extended to 2030, however when someone inherits a pension, that will be included in the inheritance tax calculation from April 2027.
When agricultural land and businesses are passed on, this was previously exempt from inheritance tax. There will continue to be no tax on the the first £1 million of inheritance of things like farms, but then 20% tax on anything after that from April 2026. This means that farming communities may have to start paying tax when they inherit land.
Business property relief on shares that aren’t listed on a registered stock exchange will also only get 50% relief (so paying 20% inheritance tax) from April 2026.
Non-Doms
These are people who may live in the UK but their permanent home for tax purposes is outside of the UK. Instead of paying tax on all worldwide earnings, they can currently pay a flat rate fee of £30,000 - £60,000 and not have to declare their full worldwide earnings.
This regime will be abolished and replaced with a regime based on residence (where a person lives) from April 2025.
Under the new regime, if they haven’t been tax-resident in the UK for the past 10 years they won’t have to pay tax on their income or capital gains for the first 4 years of residence in the UK. They will also start to have to pay inheritance tax on worldwide income.
Other Tax Changes
Taxes on alcohol will go up by the RPI measure of inflation, but draught duty on pints in pubs will be cut 1.7%.
Tobacco taxes will increase by 2% above inflation (10% above inflation for hand rolled tobacco).
There will be a new tax on vapes of £2.20 per 10ml liquid from October 2026.
The government are reviewing the thresholds for the sugar tax on soft drinks, will increase it by 2% above inflation, and may extend it to other milk-based drinks.
There will be a new Office for Value for Money to ensure value for money from government spending.
There will be a Covid Commissioner appointed to claw back money given out fraudulently during Covid.
The Lifetime Learning Entitlement (a loan to help people cover tuition fees for retraining) will be delayed to September 2026.
Interest on Unpaid Taxes
The rate of interest you have to pay HMRC if you haven’t paid your taxes on time will increase from 2.5% above the bank of England’s interest rate level, to 4% above this level. That will take it to a 9% interest rate at current rates.
New Borrowing Rules
The Chancellor announced two new fiscal rules (rules which determine how much she can borrow or spend). The first is the stability rule which says the budget for day-to-day spending must balance over a 3 year period (from 2029).
The second is an investment rule which says that debt must be falling over a 3-year period but (from 2029) but the measure of debt is changing to be the net of assets and liabilities, which will give the chancellor around an extra £50 billion of room to spend on capital projects. In total they will spend over £100 billion in capital investment over the next five years. The government will also bring in some guardrails to try to ensure value for money including ensuring returns must be more than they’d get from just borrowing money, and ensuring annual reporting. A lot of this spending will be done through the new National Wealth Fund.
Government Spending
All government departments are being asked to cut costs by 2% next year as efficiencies, although their actual budgets will rise on average by 1.5% above inflation. This will still mean some departments having to cut spending significantly.
Pensions will rise by 2.5% i.e £473 a year. But pensioners who are not claiming Pension Credit will lose their winter fuel allowance (as announced in July). The household support fund which provides money to the council to help people in financial difficulties (including some pensioners affected by the removal of the winter fuel allowance) will be increased by £1 billion.
Social Security payments will rise in line with September’s inflation figure of 1.7%.
There will be further reforms announced to cut spending on social security, especially for disabled people, in order to get them to work.
Carers will be able earn up to £195 a week before they lose access to carers allowance and there will be a review into the overpayments situation which has resulted in many carers being asked to repay thousands of pounds.
The government will invest £20 billion in research and development and a further £5 billion in new housing. They will reduce the “Right to Buy” discount for buying your council house.
They will also prioritise new spending on schools local government and the NHS. The NHS will receive a record £22.6 billion increase in spending plus a £3.1 billion increase in it’s capital budget.
Education will receive a 19% increase in its capital budget to fund rebuilding of schools and for school maintenance. There will also be £2.3 billion in funding for new teachers, £1 billion for special education needs funding and they are tripling the investment in breakfast clubs.
The transport department’s budget will be cut but they will still spend on some new schemes such as the Transpennine upgrade, East-West Rail, extending HS2 to Euston station, improving local transport connections, and £500 million on road maintenance and sorting potholes.
Further detailed information on the changes in the budget can be found here.
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