After months of rumours, predictions and “someone on LinkedIn said…”, Chancellor Rachel Reeves finally delivered her Autumn Budget. The biggest twist was the Budget documents being published early by mistake, proving that even the OBR knows how it feels to hit “send” too soon.
As always, we’ve stripped out the politics and noise and focused only on the changes that will actually affect our clients.
Headline changes
- Freeze on personal tax thresholds extended until April 2031
- Higher taxes on property, savings and dividend income from April 2026 and 2027
- Changes to National Insurance around pension salary sacrifice from 2029
- Mileage-based charge on electric vehicles from April 2028
- Major reforms to Council Tax for high-value homes from April 2028
- More funding for infrastructure, apprenticeships and regional development
- Increases in National Minimum Wage and Living Wage
- Reform of ISA rules and allowances from April 2027
- Reduction in CGT relief on Employee Ownership Trusts with immediate effect
Property, savings and investment income
A major theme running through the speech was the attempt to “rebalance” the treatment of income derived from assets compared with income from work. The Government will introduce new standalone tax rates for property income, meaning landlords will face rates of 22%, 42% and 47% depending on their tax band from April 2027.
Dividend tax rates will also rise by 2% (10.75% for basic rate taxpayers and 35.75% for higher rate taxpayers) from April 2026. The additional rate stays the same, at 39.35%. A similar 2% increase will apply to tax on savings income from April 2027. These changes don’t alter existing allowances, but do mean that landlords, investors and savers will feel more of the tax burden than at present.
Changes to pension salary sacrifice (from 2029)
Pension planning is also being reshaped. Salary sacrifice has become increasingly costly for the Treasury, so from 2029 a cap of £2,000 a year will apply to the NIC-free element of sacrificed pension contributions. Anything above that limit will attract employer and employee NICs.
Pension tax relief itself is untouched, and the impact on most basic rate taxpayers using salary sacrifice is expected to be modest. However, higher earners making large contributions will need to rethink how they structure their pension saving.
Based on what has been announced, it remains unclear as to how these changes will affect owner-managed businesses. However, we will be posting further guidance on this in due course.
Capital Gains Tax (CGT)
Although not news, it is worth reminding that from April 2026 the CGT rate for Business Asset Disposal Relief will rise to 18%, aligning it with the main lower rate. The relief itself remains in place, but becomes less advantageous.
The Government has also taken a sharp turn on Employee Ownership Trusts (EOTs). Until now, shareholders selling their business into an EOT could benefit from a complete CGT exemption. This has been cut overnight. From today onwards, only 50% of the disposal will be exempt and the remaining 50% will be treated as a chargeable gain.
Electric vehicle excise duty (eVED)
For drivers, the long-discussed mileage-based tax for electric vehicles is finally happening. From April 2028, a new electric vehicle mileage tax will apply to fully electric and plug-in hybrid cars. It will be based purely on mileage rather than tracking where or when journeys take place. The Government has been clear that no location data will be collected and no trackers will be required.
Anything else?
There were also broader measures involving infrastructure investment, increased support for apprenticeships, regional development funding and upcoming reforms to ISA allowances, as well as increases in the National Minimum Wage and Living Wage. While important, these changes tend to impact specific groups rather than the majority of individual taxpayers.
What next?
For most people:
- Expect steady tax increases through fiscal drag (a stealth tax effect where inflation drags earners into higher brackets), due to extended freeze on personal tax thresholds
- Landlords and investors should review whether current ownership structures remain tax-efficient
- Higher earners should plan ahead for the changes to pension salary sacrifice and ISAs
- EV and company car drivers may want to look at estimated long-term costs before changing vehicles
If you would like to understand how these changes affect your personal tax position, your company or your future planning, get in touch with the Maslins team. We will be posting more updates as the finer details come through, so watch this space.
Any question? Get in touch with the team.
