Chancellor Rachel Reeves unveiled the Autumn Budget 2025 on 26 November, and there’s a lot in it for both individuals and businesses across the UK. The big headline rates - income tax and corporation tax stay the same, so there’s some stability there. But dig a little deeper, and you’ll spot plenty of changes to allowances, reliefs, and thresholds that can still make a real difference. Here’s a look at the main measures and what they actually mean for your personal tax rates, your savings and investment income, and how businesses handle their taxes. 

UK Budget 2025 Key Highlights

The government is aiming to bring in a hefty revenue around £26 billion by 2030. 

A key part of their strategy? They’re keeping most personal income-tax thresholds frozen right through to 2031. 

Rather than raising the main rates for income tax, National Insurance, or corporation tax, they’re making a series of smaller adjustments , like tweaks to savings, dividends, property income, and capital allowances. 

So, what does this mean for people? As wages, savings, or property income increase over time, more people find themselves in higher tax brackets and end up paying more.

Tax Changes for Individuals

1. Frozen tax thresholds

The personal allowance, the amount you can earn before paying income tax remains at £12,570. The basic-rate band stays at £37,700, and the higher-rate threshold is fixed at £50,270. These figures aren’t set to change until 2031.

Here’s the issue. As wages and prices increase, more people are pulled into higher tax bands. So, even if the tax rates seem unchanged, you end up paying more tax overall. It’s a classic stealth tax.

2. Savings, dividends, and property income

The Budget increases taxes on savings interest, dividends, and rental income.

From April 2026, dividend tax rises by 2%. The basic-rate for dividends goes from 8.75% to 10.75%. The higher-rate increases from 33.75% to 35.75%. The additional rate stays the same.

Then, starting April 2027, taxes on savings interest and property income get stricter. The basic rate becomes 22%, the higher rate 42%, and the additional rate 47%.

Landlords should note: finance-cost relief will now align with the new basic rate.

3. More changes to personal finances

The tax-free allowance for cash ISAs is reduced. Most people under 65 will see their annual limit drop from £20,000 to £12,000.

There’s also a new limit on salary-sacrifice pension contributions. From April 2029, only the first £2,000 of these contributions will qualify for national insurance relief.

So, while the official income tax bands haven’t shifted, the reality is clear. Most people will end up paying more tax on savings, dividends, property income, and even pension contributions.

What’s New for UK Businesses

1. Capital allowances and investment incentives

The Budget adjusts how tax relief applies when companies invest in machinery or other qualifying assets.

From January 1, 2026, a new first-year allowance takes effect: businesses can claim 40% upfront on “main-rate assets.” This is particularly useful if your business involves leased property or equipment, property investors and leasing companies will benefit from this.

However, there’s a downside. Beginning April 2026, the writing down allowance for main pool assets (those not eligible for full expensing or the new first-year allowance) will fall from 18% to 14%. So, you get more tax relief at the outset, but the depreciation allowance is reduced afterwards.

The Annual Investment Allowance (AIA) remains at £1 million.

In summary: certain investments get more generous upfront relief, but other assets will be written down more slowly in the future.

2. Corporation tax and other business tax rates

There are no surprises here, the main corporation tax rates will stay the same.

Still, the changes in capital allowances, along with higher taxes on dividends and rental or investment income, could influence how business owners approach profit extraction and reinvestment.

Additionally, the Budget introduces some technical reforms, expect stricter anti-avoidance measures, adjustments to certain reliefs, and potential changes to VAT thresholds. The aim is to close the tax gap and ensure more businesses comply with the rules.

Why Autumn Budget 2025 Matters

The Autumn Budget 2025 isn’t just about adjusting figures; it signals that the government is looking to change direction. Rather than making headlines by increasing income or corporation tax rates, they’ve introduced a series of smaller, less noticeable measures. At first glance, these might not appear significant. But over time, most households and businesses will start to feel the impact as these changes accumulate.

Here’s what’s happening beneath the surface: Tax thresholds are being kept frozen for several years. With inflation and rising wages, more people will find themselves in higher tax brackets even though the rates haven’t changed. Meanwhile, taxes are going up on savings, dividends, rental income, and investments. Combined with stricter pension relief rules, this means passive income is becoming more expensive.

Business owners face their own set of challenges. The updated capital allowance rules offer some incentives to invest now, but it’s important to run the numbers. In some cases, using the first-year allowance is best; in others, a longer-term approach may be wiser. There’s no universal solution.

So, what’s the next step? Whether you own a business or manage your personal finances, now is the time to review your situation carefully:

• Look at where your income is coming from - whether it’s salary, dividends, rent, or interest on savings.
• Consider the timing of your investments and select your assets with the new rules in mind. Choosing between leasing and buying is now more important than ever.
• Revise your cash flow and investment strategies, and be prepared for your tax bill to rise rather than fall.

The takeaway? These changes may not grab headlines, but they’re here to stay. Stay alert and plan ahead.

Final Thoughts

This year’s Autumn Budget doesn’t introduce any major tax increases, but it’s full of smaller adjustments that add up over time. Freezing thresholds, changing rates on savings and property income, and making tweaks to capital allowances; all of this means that most individuals and business owners will end up paying more tax in the long run.

If you run your own business, now is the time to take a close look at how these changes might affect your bottom line. Your income, investment plans, and even your future tax position are all impacted. The decisions you make about business structure and timing, along with the advice you receive, can make a real difference. They could leave you with more money in your pocket.

Don’t try to navigate these changes on your own. A small business accountant can help you stay ahead, make informed choices, and reduce stress. GoForma’s team supports thousands of UK business owners just like you, providing planning, bookkeeping, company accounts, and tax advice.

If you want an expert on your side to help you stay compliant and keep more of your earnings, get in touch with GoForma.