The Chancellor’s latest Autumn Budget delivered a wide-ranging overhaul of the UK tax landscape. While some adjustments take effect straight away, many of the most significant reforms are scheduled over the next few years, creating a long runway for households and businesses to prepare.
Taken together, the measures reveal a clear direction of travel: tightening the tax base while avoiding headline-grabbing increases that would breach manifesto commitments.
Income, Savings and Property: Higher Rates on the Horizon
One of the more notable shifts is a broad increase in the tax rates applied to property income, savings income and dividends. These categories will see a universal 2-percentage-point uplift (except for the additional dividend rate), though not all at once.
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Dividend tax rises from April 2026.
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Savings and property income rates increase a year later, from April 2027.
In parallel, the government will cap cash ISA contributions at £12,000 from 2027 for under-65s. The overall £20,000 allowance remains, but savers will need to use stocks and shares ISAs if they want to maximise their annual limit.
Pensions, Drivers and Wealth: New Caps and New Charges
Pension rules escape major reform this year, but a key future restriction has been locked in: from 2029, the value of pension contributions that can benefit from employee and employer NIC relief under salary sacrifice will be capped at £2,000 a year.
Electric and hybrid vehicle owners will also face new charges, with a per-mile levy coming into force from April 2028—3p for electric cars and 1.5p for plug-in hybrids.
Those with high-value homes will notice a fresh levy too. From April 2028, properties in England valued above £2 million will attract a council tax surcharge, ranging between £2,500 and £7,500 annually.
A Small Win for Estates and Agriculture
A rare piece of positive news emerged for farmers and business owners. The planned £1 million combined allowance for 100% agricultural property relief and business property relief will now be transferable between spouses and civil partners. Importantly, it can be carried forward even if one partner died before the rule change, adding long-term flexibility to estate planning.
Frozen Thresholds: The Government’s Favourite Tool
The Budget confirmed what many had expected: numerous thresholds—already frozen in recent years—will remain unchanged until April 2031. These include:
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personal income tax thresholds
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employer NIC secondary threshold
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the inheritance tax nil-rate band
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the new £1 million business/agricultural relief allowance
This extended freeze effectively increases the tax burden through wage inflation rather than explicit rate rises.
Student loan repayments will also be affected, with the Plan 2 repayment threshold frozen for three years from April 2027.
Capital Allowances: Slower Relief, New Incentives
Businesses investing in plant and machinery will see the main writing-down allowance fall from 18% to 14% from 2026. To offset this, a new 40% first-year allowance will be introduced from January 2026, giving faster upfront relief for qualifying expenditure.
Dividends, Savings and Property: Further Detail
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Dividend tax: Basic and higher rates rise to 10.75% and 35.75% respectively from April 2026.
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Savings income: Rates increase across all bands from April 2027, with the basic rate rising to 22%.
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Property income: A standalone tax regime will be introduced, with rates of 22%, 42% and 47% from April 2027.
Landlords will receive interest relief at the new 22% property basic rate.
Changes Affecting Employees
Several employee-related measures take effect from April 2026:
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The income tax deduction for unreimbursed homeworking expenses is being removed.
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However, tax-free employer reimbursements for eye tests, home-working equipment and flu vaccinations will be permitted.
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The extension of Benefit-in-Kind rules to car ownership schemes has been delayed to April 2030, with transitional rules running through 2031.
Election Vehicles and Mileage Charges
From April 2026, the “expensive car supplement” threshold for zero-emission vehicles rises to £50,000. Then in 2028, a new mileage supplement for EVs and hybrids arrives—another example of how the tax treatment of green vehicles is evolving as EV adoption grows.
State Pensions and Simpler Assessments
From April 2027, pensioners whose only income is the state pension will no longer need to complete a simple assessment if their entitlement exceeds the personal allowance. This removes an administrative burden for many retirees.
Capital Gains Tax and Incorporation Rules
Capital gains tax relief on sales to employee ownership trusts will be cut from 100% to 50% from November 2025.
In addition:
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Anti-avoidance rules for share exchanges and reorganisations are being “modernised”, with immediate effect.
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From April 2026, taxpayers will need to actively claim incorporation relief—it will no longer apply automatically.
Share Schemes and Investment Incentives
The EMI scheme is being broadened significantly from April 2026. Eligibility thresholds rise sharply, including:
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employee limit increasing to 500
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gross assets limit increased to £120m
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employee option limit raised to £6m
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maximum holding period extended to 15 years
The notification requirement disappears in 2027.
Alongside this, EIS and VCT investment limits will rise dramatically from April 2026, though VCT income tax relief will drop from 30% to 20%. Stamp Duty Reserve Tax relief will also temporarily apply to newly listed companies.
VAT, Fuel Duty and Other Measures
Additional adjustments include:
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VAT relief for donated goods used for charitable purposes (from April 2026).
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Motability vehicles facing VAT and IPT on certain top-up payments from July 2026.
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Fuel duty: the temporary 5p reduction remains until mid-2026, after which rates will gradually return to pre-2022 levels.
Non-Resident Taxation
From April 2026:
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non-residents will lose the dividend tax credit, aligning them with UK taxpayers
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Class 2 NI contributions will no longer be available to increase UK state pension entitlement
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the temporary non-residence rules will be adjusted so that all dividends received during the period remain taxable
Immediate changes also close loopholes in non-resident CGT rules.
Customs, Penalties and Administrative Reforms
Further measures include:
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Customs duty to be applied to imported goods valued under £135 by March 2029
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Corporation tax filing penalties doubled from April 2026
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Income tax computation rules changing from April 2027 to alter how reliefs are allocated across income types.