Autumn BUDGET 2025

The Government announced a  number of key changes which impact both individuals and UK employers/companies over the coming years as outlined in this article.

Summary

Tax & National Insurance

The Chancellor announced policies on:

• Property Income - From 6 April 2027, separate tax rates will be created for property income.  The income tax rates on property income will be 22% for basic rate, 42% of higher rate and 47% for additional rate representing a 2/3% increase in current rates.
• Savings Income - From 6 April 2027, the tax rates on savings income will increase to 22% for basic rate, 42% for higher rate and 47% for additional rate tax payers. 
• Dividend Income - From 6 April 2026, the tax rates applying to dividend income will increase to 10.75% for basic rate, 35.75% for higher rate and 39.35% for additional rate tax payers. 
• Pensions salary sacrifice - From 6 April 2029, the amount of salary that an employee can sacrifice in return for pension contributions before paying National Insurance will be capped at £2,000.  This does not impact the tax relief that employees are entitled to on their pension contributions. 
• Voluntary Class 2 National Insurance contributions - From 6 April 2026, individuals who are working abroad will no longer be able to make voluntary class 2 National insurance contributions (currently £3.50/week).  Instead, individuals will be able to make a voluntary Class 3 contribution where they have been UK resident for at least 10 continuous years or paying UK national insurance for 10 continuous years.
• Payrolling benefits in kind - From 6 April 2027, employers will be required to payroll benefits in kind and will no longer have the option to report these on employee Forms P11D.  In anticipation of this change, HMRC have published draft guidance to support employers and software developers.