2025 Autumn Statement: UK Budget Reflections

Last Wednesday Rachel Reeves ushered in a plethora of new taxes to raise £26bn by 2029-30, these were the main highlights.

Firstly, the national insurance and income tax threshold has been frozen for an additional 3 years beyond 2028, in what is being described as a ‘stealth tax’. Regarding inheritance tax, there have been no major reforms bar the freezing of the IHT thresholds until April 2031.

Taxes on savings and dividends have also increased. For income on dividends the ordinary and upper tax rate has gone up 2% and for income on savings, all the tax rates have increased by 2%.

There were also changes to the pension schemes, more specifically the ‘salary sacrifice’. Salary sacrifice is a scheme that allows you to ‘give up’ a portion of your salary in exchange for your employer paying that difference into your pension. That amount was not subjected to income tax or national insurance. However, there is now a cap of £2,000 per year starting form 2029, meaning anything over that will be subject to national insurance.

Taxes have also increased on income from rentals with it rising by 2% from April 2027.

The big property tax introduced, ‘mansion tax’, is aimed at high-net-worth property owners. For properties worth between £2m and £2.5m, it is £2,500 annually. For properties worth between £2.5m and £3.5m, it is £3,500 annually. For properties worth between £3.5m and £5m, it is £5,000 annually.

Source: Budget 2025 (HTML) – GOV.UK

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