27 November 2025 –
Chancellor of the Exchequer Rachel Reeves set out tax-raising measures worth up to £26 billion in the Autumn Budget on 26 November 2025.
The increases will be achieved through a range of measures, including extending the freeze on Income Tax thresholds for a further three years.
Here are some of the highlights…
Company Directors
Announcements that may be of particular interest to directors include the following:
- maintaining the Income Tax thresholds until 2031, meaning that more people will be dragged into paying a higher rate of tax.
- increasing the tax rates on dividend income by 2% from April 2026: The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. The additional rate will remain unchanged at 39.35%.
- increasing the tax rates on property income by 2% (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%).
- increasing the tax rates on savings income by 2% (from April 2027): The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47%.
- Annual Allowance for pensions kept at £60,000.
- from 6 April 2027, the annual ISA cash limit will be reduced to £12,000, while the rest of the total ISA limit – up to £8,000 – can still be put into a stocks and shares ISA (this change will not apply to those over the age of 65 where the ISA cash limit will remain as £20,000).
- from April 2028, properties valued at £2 million or more will be liable to a new High Value Council Tax Surcharge (HVCTS).
National Living Wage and National Minimum Wage
The government has announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2026. The hourly rates which will apply are as follows:
- £12.71 for those aged 21 and over
- £10.85 for those aged 18-20
- £8 for 16 and 17 year olds
- £8 for apprentices
The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship.
Corporation Tax
The government has confirmed that the rates of Corporation Tax will remain unchanged, which means that, from April 2026, the rate will stay at 25% for companies with profits over £250,000.
The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.
The government has committed to capping the main rate of Corporation Tax at 25% for the duration of the Parliament.
The penalty for taxpayers submitting a Corporation Tax return late will double for returns for which the filing date is on or after 1 April 2026.
The VAT registration threshold
From 1 April 2026 the VAT registration threshold remains at £90,000 and the deregistration threshold at £88,000.
Changes to salary sacrifice for pensions from April 2029
The government is changing how salary sacrifice for pension contributions works.
Salary sacrifice is when you agree to reduce your gross salary or sacrifice a bonus and, in return, your employer pays the same amount into your pension.
From April 2029, only the first £2,000 of employee pension contributions through salary sacrifice each year will be exempt from NICs. Contributions through salary sacrifice, like all pension contributions, will still be exempt from Income Tax (subject to the usual limits).
Employers and employees can still make contributions above £2,000 through salary sacrifice arrangements. However, employee contributions above this amount will be subject to employer and employee NICs like other employee workplace pension contributions.
Employers will need to report the total amount sacrificed through their existing payroll. All employer pension contributions will continue to be free of NICs.
Employees, as well as employers, will pay NICs on the amount above £2,000 for employee contributions through salary sacrifice.
Employees who choose to salary sacrifice to receive Tax Free Childcare or Child Benefit can keep doing so.
Agricultural Property Relief & Business Property Relief
From 6 April 2026, agricultural and business property will continue to benefit from the 100% IHT relief up to a limit of £1 million.
The limit is a combined limit for both agricultural and business property.
However such property in excess of the limit will benefit from only 50% relief.
The £1 million limit applies per person and is refreshed every seven years.
From 6 April 2026, this allowance will be transferable between married couples or civil partners. This will include where the first death was before 6 April 2026.
There may be a further £1 million allowance for trusts in certain situations but the rules are complex.
The £1 million limits for both individuals and trusts will be frozen until 6 April 2031.
These changes are broad and don’t just impact farmers; potentially the owners of many SMEs in the UK may be impacted. Early IHT planning becomes critical under the new rules.
The transferability of the allowance between spouses/civil partners seems to be recognition of taxpayer concerns.
Enterprise Investment Scheme and Venture Capital Trusts investment limit increase and restructure
The government has announced significant changes to the limits applying to the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) from 6 April 2026.
The gross assets requirement that a company must not exceed for EIS and VCTs will increase from £15 million to £30 million immediately before the issue of the shares, and from £16 million to £35 million immediately after the issue.
The annual investment limit that companies can raise will increase from £5 million to £10 million. For Knowledge-Intensive Companies (KICs), the annual investment limit will increase from £10 million to £20 million.
The company’s lifetime investment limit will increase to £24 million and for KICs to £40 million. The Income Tax relief that can be claimed by an individual investing in VCTs will decrease from 30% to 20%.
Expanding the eligibility limits of the Enterprise Management Incentives scheme
The government is also increasing certain limits relating to the Enterprise Management Incentives (EMI) scheme.
For EMI contracts granted on or after 6 April 2026, the employee limit will increase from 250 employees to 500 employees, the gross assets test will be increased from £30 million to £120 million, and the company share option limit will be increased from £3 million to £6 million.
The limit on the exercise period will increase to 15 years, and will also apply retrospectively to existing EMI contracts which have not already expired or been exercised.
Employee Ownership Trusts
The current relief available for qualifying disposals by business owners selling their shares to Employee Ownership Trusts (EOTs) is a 100% exemption of any gain.
From 26 November 2025, the relief will only exempt 50% of the gain. Business Asset Disposal Relief and Investors’ Relief will not be available where the 50% exemption has been claimed. The remaining 50% of the gain on disposal will not form part of the disposer’s chargeable gain. Instead, 50% of the gain will be held over and deducted from the trustees’ acquisition cost.
This will mean that it will come into charge on any subsequent disposal or deemed disposal of the shares by the trustees of the EOT.
Need help understanding the impact of the changes on your business?
Zip Accounting is here to cut through the tax jargon and help you understand how it impacts your business and plan for future changes.
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