The Budget reviewed

Key impacts on businesses, individuals and property owners

Chancellor Rachel Reeves delivered her second Budget on 26th November 2025 against a backdrop of slow economic growth and continued inflationary pressure. As expected, the measures announced will result in higher tax bills for many households and businesses over the coming years, with a particular focus on income, property and savings. In this summary, our Tax Team at LWA highlights the main points that business owners and individuals should be aware of.

Income tax, savings and dividend

A major headline is the extension of the freeze on income tax and National Insurance thresholds until 2031, meaning more people will move into higher tax bands as earnings rise.

Dividend tax rates will increase by 2% from April 2026, while savings and property income tax rates will rise by 2% from April 2027, impacting investors, landlords and company shareholders.

Measures affecting employers and business owners

For employers, minimum wage increases take effect from April 2026, alongside a significant pension reform: salary sacrifice pension contributions above £2,000 per year will attract NICs from April 2029.

Companies can benefit from a new 40% first-year capital allowance from January 2026, although this is countered by the reduction of the main writing-down allowance from 18% to 14% from April 2026.

Corporation tax rates remain unchanged.

Property taxation and ISA changes

Property owners face further tax pressure. A new “mansion tax” will impose an additional annual council tax surcharge of at least £2,500 on homes valued over £2 million from April 2028.

From April 2027, higher income tax rates will also apply to property income.

Savers under 65 will see the cash ISA limit capped at £12,000 from April 2027, although the overall ISA limit remains at £20,000.

Electric vehicle tax changes

From April 2027, a new road excise duty will apply at 3p per mile for electric cars and 1.5p per mile for hybrid vehicles, marking the first move towards fully taxing EV use as the UK transitions away from traditional fuel duty. Businesses operating electric fleets or mileage-heavy operations should factor these additional running costs into future budgeting and vehicle planning.

LWA are here to help you

LWA’s Corporate and Personal Tax Teams are here to help you understand how the measures affect your business, family finances or property portfolio.

For bespoke advice, please contact us on 0161 905 1801 (South Manchester) or 01925 830 830 in Warrington, or you can email mail@lwaltd.com.

Visit LWAltd.com and click on ‘Resources’ to download your free copy of our full 2025 Autumn Budget Summary PDF.

Leavitt Walmsley Associates Chartered Certified Accountants

www.lwaltd.com

Budget concerns for SMEs

Kelly Jackson, Managing Director of Jackson Accounts Limited, has voiced concerns following the budget, highlighting the potential challenges facing SMEs.

According to Kelly “the outlook for SMEs is becoming increasingly uncertain,” she explains.

Kelly emphasised that some company directors, who are already struggling to earn a wage to live in a world with increasing living costs, will now face higher dividend taxes due to their classification as higher earners. “It is worrying that business owners – who play such a vital role in creating jobs and driving economic growth in their communities – may be disproportionately penalised,” she said.

In contrast, she welcomed the opposing perspective presented by Kemi Badenoch, noting that her arguments resonated with her own views on the situation.

As SMEs navigate this changing landscape, Kelly encourages business owners to carefully assess the implications of the budget on their operations and long-term financial planning. Some of the changes are listed below.

Property Income (from 6 Apr 2027)

• New standalone tax rates: 22% basic, 43% higher, 47% additional.
• Scotland & Wales will be given powers to set their own rates.

Savings Income (from 6 Apr 2027)

• Increased rates: 22% basic, 42% higher, 47% additional.

Dividend Income (from 6 Apr 2026)

• Rates rise by 2%: – 10.75% ordinary rate – 35.75% higher rate
• Additional rate remains 39.35%.
• No change to reporting/payment methods.

Salary Sacrifice for Pensions (from Apr 2029)

• New £2,000 annual cap on NIC-free salary sacrifice.
• Contributions above this subject to employer + employee NICs.
• Income Tax relief unchanged.

Voluntary NICs for Working Abroad (from Apr 2026)

• Class 2 NICs for periods abroad abolished.
• New Class 3 claims require 10 years UK residency/NICs.
• Pre-2026 years unaffected.

Veterans NIC Relief

• Employer NIC relief extended until 2027–28.

Cancelled Shift Payments

• Fully subject to Income Tax and NICs.
• Clarifies overseas earnings rules and prevents double relief.

Employee Ownership Trusts (from 26 Nov 2025)

• CGT relief reduced 100% to 50%.
• Additional measures to close avoidance loopholes.

Incorporation Relief (from 6 Apr 2026)

• Now claimed via Self-Assessment.

Real-Time Benefits Reporting (from 6 Apr 2027)

• Mandatory real-time reporting of Income Tax and Class 1A NICs on most benefits in kind.
• Draft guidance and legislation published.

Homeworking Expenses Simplified (from 6 Apr 2026)

• New exemptions for employer-provided homeworking equipment, eye tests and flu vaccinations.

Employee Car Ownership Schemes (from 6 Apr 2030)

• Vehicles under ECOS treated as taxable benefits.

www.jackson-accounts.com