Autumn Budget 2025 - Personal Tax Update

Earlier today the Chancellor Rachel Reeves delivered the Autumn Budget 2025. Our Private Client tax team shares their summary of the key tax changes relevant to individuals and owners of wealth.

There are hundreds of pages of documents released alongside the Budget Speech, so detailed review is ongoing. In the meantime, the key headlines are:

Personal tax thresholds: Income Tax and National Insurance thresholds will remain frozen until April 2031, extending the freeze by three years. This "stealth tax" will push millions of taxpayers into higher tax bands through fiscal drag, raising an estimated £8 billion by 2029–30.

Pension salary sacrifice cap: A new £2,000 annual cap on pension salary sacrifice relief will generate nearly £5 billion in additional tax and National Insurance. This change is likely to reduce pension savings and could affect employment cost strategies.

Investment income tax increase: From 2027, a 2% rise in tax rates on property and investment income will come into effect, expected to raise about £2.1 billion. This measure will impact landlords and savers with income from investments.

Notable exclusions: The Budget did not introduce several controversial measures some expected, such as a wealth tax, an exit tax for individuals leaving the UK, or National Insurance on LLP members’ profit shares—offering some relief to affected groups.

Previously announced reforms proceeding: From April 2026, Capital Gains Tax rates on Business Asset Disposal Relief and Investors’ Relief will increase. Other reforms include changes to agricultural and business property reliefs, carried interest being taxed as income, and the end of using pensions for inheritance tax planning.

Income tax ordering and ISA limits: Starting April 2027, the Personal Allowance will be deducted first against employment, trading, or pension income. Additionally, the ISA cash investment limit will be £12,000 annually for those under 65, while those over 65 retain the full £20,000 allowance.

Investment scheme adjustments: Eligibility limits for Enterprise Management Incentive schemes and EIS and VCT company size limits will be raised to promote broader investment. However, VCT income tax relief will reduce from 30% to 20% from April 2026.

Voluntary National Insurance contributions abroad: From April 2026, cheaper Class 2 NICs will be replaced by the more expensive Class 3 contributions for those outside the UK wishing to maintain their NI record, subject to qualifying residency or contribution history.

For more detailed advice on what these changes mean for your personal tax circumstances, please get in touch with our team using the form at the bottom of this page.

>> Click here to download our 2025 Budget document to view the full overview from our personal tax team.