28 Nov 2025
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The 2025 UK Budget sets out a clear intention: increasing revenue through targeted tax reforms while protecting certain household costs and signalling long-term investment priorities. Below is a clear and practical summary of the confirmed tax changes, who they affect, and what they could mean for you.
| Measure | What changes | Who's affected | Headline impact |
|---|---|---|---|
| Income tax thresholds freeze | Freeze extended to April 2031 | Employees, directors, landlords | More people pulled into higher bands over time |
| Increase to tax on Property, Dividend and Savings income | 2% increase to tax rates | Individuals, landlords, investors, pensioners, savers | £200 increase for every £10,000 of income that falls into these categories |
| “Mansion tax” | New annual levy on homes over £2m | High value property owners | £2,500–£7,500 per year depending on value |
| EV taxation | New tax on electric vehicles | Fleets, company car drivers, EV owners | Raises cost of EV benefit/ownership |
| Fuel duty | Frozen | Drivers, logistics | No immediate pump price rise from duty |
| Salary sacrifice pensions | NI begins above £2,000 via sacrifice | Employers and employees | Limits NI-free pension structuring |
| Transferable £1million IHT allowance for APR/BPR | The £1million allowance becomes transferable between spouses and civil partners | Farmers and business owners | Unused £1million allowance to be transferable between spouses and civil partners |
| Overall tax burden | Rises to record levels by decade end | Most taxpayers | Highest tax-take levels in history |
Measure:
Income tax thresholds freeze
What changes:
Freeze extended to April 2031
Who's affected:
Employees, directors, landlords
Headline impact:
More people pulled into higher bands over time
Measure:
Increase to tax on Property, Dividend and Savings income
What changes:
2% increase to tax rates
Who's affected:
Individuals, landlords, investors, pensioners, savers
Headline impact:
£200 increase for every £10,000 of income that falls into these categories
Measure:
“Mansion tax”
What changes:
New annual levy on homes over £2m
Who's affected:
High value property owners
Headline impact:
£2,500–£7,500 per year depending on value
Measure:
EV taxation
What changes:
New tax on electric vehicles
Who's affected:
Fleets, company car drivers, EV owners
Headline impact:
Raises cost of EV benefit/ownership
Measure:
Fuel duty
What changes:
Frozen
Who's affected:
Drivers, logistics
Headline impact:
No immediate pump price rise from duty
Measure:
Salary sacrifice pensions
What changes:
NI begins above £2,000 via sacrifice
Who's affected:
Employers and employees
Headline impact:
Limits NI-free pension structuring
Measure:
Transferable £1million IHT allowance for APR/BPR
What changes:
The £1million allowance becomes transferable between spouses and civil partners
Who's affected:
Farmers and business owners
Headline impact:
Unused £1million allowance to be transferable between spouses and civil partners
Measure:
Overall tax burden
What changes:
Rises to record levels by decade end
Who's affected:
Most taxpayers
Headline impact:
Highest tax-take levels in history
Income Tax Threshold freeze to 2031
Income tax bands remain fixed for an additional three years, now to April 2031. As wages rise, more taxpayers drift into higher bands (“fiscal drag”), increasing effective tax without rate changes.
Impact: Higher effective tax for earners over time, especially those moving from basic to higher rate due to pay growth. Planning around allowances (e.g., pension contributions, charitable giving) becomes more valuable, consideration to tax incentivised schemes such as Enterprise Investment Scheme (“EIS”), Seed Enterprise Investment Scheme (“SEIS”) and Venture Capital Trusts (“VCT”) for some taxpayers.
For every £10,000 of taxable income in these categories, individuals will pay £200 more in tax:
Property Income Tax (from April 2027)
Dividend Tax (from April 2026)
Savings Income Tax (from April 2027)
New “mansion tax” for homes over £2m
Annual charges apply to residential properties above £2m, with tiers starting at £2,500 for £2.0m–£2.5m and up to £7,500 for £5m+ homes.
Impact: Raises annual costs for high‑value homes, affects those who are asset rich cash poor and could affect relocation/ownership decisions. Most likely to affect those homes in London and the Southeast.
New EV tax
A fresh tax on electric vehicles affects fleets and potentially company car users and those purchasing EVs.
Fuel duty freeze
Duty remains unchanged, limiting immediate increases in pump prices attributable to duty.
Impact: Total cost of EV ownership increases and may change or reduce the adoption of EVs.
Changes to NI-Efficient Salary Sacrifice
From the next tax year, employer pension contributions made through salary sacrifice will only be exempt from National Insurance on the first £2,000 of sacrificed salary.
Impact: High earners and employers lose some NI efficiency from salary sacrifice although may not deter those saving for retirement as income tax benefits remain.
Minimum wage increases (April 2026)
Announced alongside the Budget, statutory minimums rise across age brackets, with over‑21s moving to £12.71 per hour.
Impact: Not a tax change, but relevant to payroll budgets and NIC totals. Combined with threshold freezes, employers face higher gross payroll and associated taxes.
Although the Autumn Budget 2025 contains limited measures directly relating to family law, several announcements may still be relevant to separating couples, those negotiating financial settlements or individuals planning for post-divorce financial stability.
Chris Brown, Partner and Head of our Family Law Department, comments:
“Whilst there isn’t much in the autumn budget that relates specifically to family law, some relevant points are:
These changes highlight the importance of reviewing financial arrangements during divorce or separation, as shifting tax rules can influence maintenance, pension planning and how settlements are structured.
The Budget also introduced several measures relevant to business owners, company directors and those considering equity incentives for employees.
Andrew Heeler, Partner and Head of our Corporate Law Team, comments:
“The Chancellor made some strong comments in relation to trying to get investment growing in the country, in particular referring to Enterprise Management Incentive Schemes. EMI Share Option Schemes were introduced in 2000 as probably the most tax-efficient way of employees taking shares in their employer company. We have found them to be an extremely attractive option and it is good to see the scheme will be extended. We have assisted dozens of companies to introduce such schemes and it is likely that these measures will increase that popularity.
Whilst increasing the ability for employees to benefit from shares under EMI Share Options, the Chancellor made sales of companies to Employee Ownership Trusts less attractive by reducing the tax relief on the selling owners from 100% to 50%. Employee Ownership Trusts haven’t been hugely popular, and it is likely that this change will make them even less attractive. Therefore, it is unclear how much tax will be raised by this measure and how it will increase the ‘co-operative’ economy that the Chancellor referred to.”
These corporate-focused changes may influence succession planning, business sales and employee incentive strategies, making professional advice increasingly important for owners and directors.
From a commercial property perspective, the Autumn Budget 2025 introduced relatively few direct changes, but several measures are still noteworthy.
Will Stokes, Partner in our Commercial Property Team, comments:
“From a commercial property perspective, there have been few changes as a result of the Autumn budget, however the below changes are of note:
Increase to property income tax rates
Although no changes have been made to non-residential SDLT rates, from April 2027 in an effort to ‘narrow the gap between tax paid on work and tax paid on income from assets’ there is to be an additional 2% of Income Tax payable by individual landlords on property income, whether they are a basic rate taxpayer, higher rate taxpayer or an additional rate taxpayer.
Business Rates
In addition, business rates are to be reformed from April 2026 so that:
• A higher rate on properties with a rateable value of £500,000 or more is to be introduced (expected to apply to around 1% of properties); and
• Permanently lower business rates multipliers are to apply to retail, hospitality and leisure properties.”
These updates may influence investment decisions for landlords and commercial occupiers, as well as operational costs for businesses in affected sectors.
Estate Planning considerations:
If you believe any of these changes may affect you, your family, or your business, it is important to obtain tailored advice. Our specialist teams can assist with tax planning, wills and probate, family law, corporate and commercial matters, and personal wealth structuring.
To discuss how the Budget may impact your personal or financial circumstances, please contact the team at Hegarty.
Whatever legal support you need, our experienced and highly skilled solicitors and legal advisors are here to help. With expertise across a wide range of legal areas, we provide clear, practical advice tailored to you. What sets us apart is our commitment to understanding your needs and delivering the best possible outcome with a personal touch.
