29/11/2025
📌 *UK Budget 2025 Update Wrap*
🔸*Budget 2025: dividend tax up 2% from 2026*
From the new tax year in April 2026, the base and higher rates of tax on dividend income will increase by 2% to 10.75% for basic-rate taxpayers and 35.75% for higher and additional rate taxpayers.
🔸*Budget 2025: pension salary sacrifice capped at £2k*
capping of national insurance contribution (NICs) relief on salary sacrifice into pension schemes to the first £2,000 of pension contributions per person from 2029.
🔸*Budget 2025: thresholds frozen to 2031*
In a blow for earners, chancellor extends income tax threshold freeze for another three years
🔸*Budget 2025: 2% rise in income tax on property*
For the first time, there will be separate tax rates for property income affecting earnings from renting lands and building.
From April 2027, income tax on property rental and income will fall under a new property tax.
The property basic rate will be 22%, the property higher rate will be 42%, and the property additional rate will be 47%.
🔸*Budget 2025: writing down allowance reduced to 14%*
Main rate of writing down allowance cut to 14% from April 2026, and 40% first-year allowance introduced from January 2026.
From April 2026 the main rate writing-down allowances for corporation tax and income tax will be reduced from 18% to 14%.
🔸*Budget 2025: tax on savings interest hiked by 2%*
announced a hike in the tax rate on savings income by 2% across all bands from April 2027. This means savers will pay tax at 22% if they are basic rate taxpayers, and 42% for higher rate payers, rising to 47% for additional rate payers.
🔸*Budget 2025: ISA limit slashed to £12k*
From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.
Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031.
🔸*Budget 2025: 3p mileage charge for EVs*
EV drivers face a pay-per-mile tax on their annual mileage, due to be added to road tax and monitored at MOTs.
The plans to tax EV drivers from April 2028 with a special electric vehicle mileage rate set at 3p per mile. But this will not affect petrol and diesel drivers.
🔸*Budget 2025: £2.5k mansion tax for expensive houses*
Anyone with a property over £2m will face annual £2,500 charge confirmed.
The new mansion tax means properties worth over £2m face £2,500 annual charge and £7,500 for £5m plus properties owners from April 2028.
🔸*National living wage rate goes up 4.1%*
Above inflation rises to national living wage to £12.71 per hour and a significant 8.5% hike in national minimum wage.
The government has confirmed above inflation rises in the national living wage with a 4.1% rise, while national minimum wage up 8.5% from 1 April 2026.
