Hussains CPA

20/03/2026

26/11/2025

UK Budget Summary – 26 November 2025

See the key points below…

Dear clients,

The Chancellor, Rachel Reeves, delivered the 2025 Budget today, setting out one of the most significant tax-raising packages in recent years. The measures focus heavily on increasing revenues through wealth, property, and passive-income taxation, while also addressing welfare reforms and labour-market pressures.

Below is a detailed summary of the measures most relevant to small business owners, and individual taxpayers.

Tax and Personal Finance
Income Tax & National Insurance

All income-tax and National Insurance thresholds remain frozen until 2030/31.
This means the personal allowance (£12,570) and higher-rate threshold (£50,270) will not rise with inflation.
Impact: As wages increase, more individuals will enter higher tax bands — significantly raising personal tax liabilities through “fiscal drag.”

The 45% additional rate threshold also remains frozen at £125,140, bringing more higher earners into the top band over time.

Dividends, Savings & Property Income

Dividend tax rates will rise by two percentage points across all bands:

Basic rate: from 8.75% → 10.75%

Higher rate: 33.75% → 35.75%

Additional rate: 39.35% → 41.35%
Impact: Owner-managers relying on dividends face higher personal tax bills.

Tax on savings income and property income (including rental profits) will also increase by 2 percentage points.
This particularly affects landlords and individuals with significant portfolio income.

Pensions & Salary Sacrifice

Salary sacrifice NIC relief capped from April 2029.

Only the first £2,000 of sacrificed salary per tax year will be exempt from employee and employer National Insurance.

Sacrifice above this will attract full NI.
Impact: High-level pension contributions via salary sacrifice become significantly less tax-efficient, affecting many small business owners and higher earners.

Savings & ISA Reform

Cash ISA allowance reduced from £20,000 → £12,000 from April 2027 for those under 65.

Stocks & Shares ISA allowance remains unchanged.

The government aims to increase investment into productive assets, so expect future reforms across savings products.

Capital Gains & Wealth Measures

CGT rates left largely unchanged in this Budget, though reforms remain under review.

New compliance rules planned for high-income investors and individuals with large capital portfolios.

‘Mansion Tax’ on High-Value Homes

A new annual property surcharge will apply from 2028 on homes valued over £2 million.

There will be multiple valuation bands:

£2m–£2.5m: approx £2,500 per year

£5m+ : up to £7,500 per year

Property revaluations will be carried out using 2026 market values.
Impact: Affects a small proportion of properties, but heavily concentrated in London and the South East.

Business and Employment
National Living Wage

The National Living Wage will rise again in April 2026, continuing the pattern of above-inflation increases.

Age 21+: £12.71/hour

18–20: £10.85/hour

16–17 & apprentices: £8.00/hour
Impact: Wage costs will increase for SMEs, especially those in retail, hospitality, care, and services.

Support for Skills & Employment

Government-funded apprenticeships for under-25s in SMEs will be introduced.

This reduces the cost of hiring and training for small businesses.

Details on funding mechanisms and employer contribution levels will follow.

SME Taxation & Compliance

No changes to the VAT registration threshold (£90,000).

HMRC to intensify compliance efforts targeting inaccuracies in small business returns, rental income, Airbnb hosts, and platform-based income.

Consultations planned on modernising Making Tax Digital for smaller landlords and unincorporated businesses.

Owner-Managed Companies

Dividend tax increases, frozen thresholds, and pension-salary-sacrifice restrictions mean owners should review remuneration strategies (salary vs dividend vs pension).

New reporting requirements for company distributions and certain shareholder loans expected in 2026.

Motoring & Energy

Electric Vehicles (EVs) to face a new Vehicle Excise Duty (VED) structure aligned more closely with petrol/diesel cars.

Company car tax bands for EVs to tighten, though still favourable relative to ICE vehicles.

Planned removal of certain EV incentives for businesses by 2028.

Welfare Changes
Two-Child Benefit Cap Removed

Effective April 2026.

Families with more than two children will once again receive full Child Benefit.

HMRC to adjust claims automatically where possible.

Working-Age Benefits & Universal Credit

Uprated broadly in line with inflation.

Additional support directed at families with young children and low-income workers.

Focus on Lone Parents & Carers

New childcare support pilots planned.

Reforms to work capability assessments still under consultation.

Economic Outlook

The Budget delivers £26–£30 billion per year in tax rises by the end of the forecast period.

The tax burden is expected to reach the highest level since the Second World War.

Growth forecasts have been downgraded by the OBR:

Weak productivity and investment continue to drag on expansion.

Rising interest payments on government debt restrict fiscal headroom.

Inflation expected to stabilise near 2% in late 2026.

Real household incomes remain under pressure due to frozen thresholds and rising taxation.

26/03/2025

Spring Statement 2025 – Key Points

On 26 March 2025, the Chancellor and Shadow Chancellor delivered their Spring Statements against a backdrop of ongoing global uncertainty, high borrowing costs, and a desire to restore fiscal stability. We’ve summarised below the key announcements: -

Economic Overview

• Inflation: According to the ONS, inflation fell to 2.8% in February, although the OBR now expects it to average 3.2% this year, before falling to 2.1% in 2026 and stabilising around 2% thereafter.

• Growth Forecast: The OBR has cut the growth forecast for 2025 from 2% to 1%, citing economic pressures and global instability.

• Government Borrowing: Revised figures show a higher short-term deficit, but a surplus of £9.9bn is forecast for 2029-30—restoring the Chancellor’s fiscal headroom.

• No new tax rises were announced. Income Tax, VAT, and employee NICs remain unchanged from the March Budget.

• Employer NICs were increased in the March Budget.

• A further £1 billion will be raised through new anti-tax avoidance and evasion measures, including investment in HMRC resources and technology.

• It remains to be seen how wider civil service cuts—including a proposed 10% reduction and the abolition of NHS England—will impact HMRC services.

Public Spending and Welfare

• Welfare Reform: The health element of Universal Credit will be cut by 50% for new claimants and then frozen. The overall welfare budget is expected to be cut by £4.8bn.

• The standard allowance for Universal Credit will rise from £92 to £106 per week by 2029-30.

• Day-to-day government spending will still grow, but more slowly—1.2% a year above inflation instead of 1.3% as previously planned.

Defence and Innovation

• Defence spending will rise by £2.2bn next year, reaching 2.5% of GDP by 2027 with an ambition to increase this to 3%.

• Notably, 10% of the equipment budget will be spent on AI, drones, and advanced manufacturing.

• A £400m innovation fund has been established to support defence tech startups and speed up procurement.

Planning and Growth Initiatives

• The government will protect capital spending, increasing it by £2bn annually.

• New planning reforms are forecast by the OBR to increase GDP by 0.2% by 2029/30 and 0.4% within 10 years, the largest forecasted GDP uplift the OBR has ever made from a single policy.

• Additional growth measures include support for a third runway at Heathrow and pension reforms to boost investment.