The second Budget of Chancellor Rachel Reeves was another ‘big’ budget in several ways: raising taxes (£26 billion by 2029/30), increasing public sector spending, and simply the sheer number of new measures (the Budget Report lists no fewer than 88 policy decisions). There was, however, little in the way of tax reform despite the Government’s stated priority of encouraging growth.
The Chancellor’s £26 billion in tax rises come from a wide assortment of measures, since she has chosen to maintain Labour’s manifesto commitments to not increase the rates of Income Tax, National Insurance Contributions (NICs) of VAT for working people (however, tax rates on property, dividend and savings income will increase).
The largest single tax-raising measure is the extension of the freeze on Income Tax and NIC thresholds for a further three years, raising over £12 billion by 2029/30. Other significant measures include charging NICs on salary sacrifice pension contributions above £2,000 a year (from April 2029), introducing a new mileage charge for electric and plug-in hybrid cars (from April 2028), changes to capital allowances, and increasing tax rates on property, dividend and saving income. She also halved the rate of CGT relief on disposals to Employee Ownership Trusts, introduced a tax on homes valued at £2 million or more (the ‘mansion tax’), capped cash ISAs and made changes to venture capital schemes (increasing the limits applying to the Enterprise Management Incentives (EMI) scheme, the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs), but reducing Income Tax relief on VCT investment).
As usual, as well as changes announced yesterday, our summary includes measures previously announced, but only coming into effect from April 2026 or later. These include:
Personal and Employment Taxes
- Income Tax – the personal allowance, basic rate band and higher rate threshold for Income Tax all remain frozen for a further three years, until 2030/31
- Income Tax – tax rates on property income and savings income increase by 2% from 2027/28
- Income Tax – the ordinary and upper rates of Income Tax on dividends increase by 2% from 2027/28
- Income Tax – the rates of income tax remain unchanged at 20% (basic), 40% (higher) and 45% (additional rate) for other income
- ISAs – the annual cash limit will be reduced to £12,000 from 6 April 2027, except for those over 65, and the annual limit will remain at £20,000 until 2031
- National Living Wage and National Minimum Wage increase from 1 April 2026
- Pension salary sacrifice – pension contributions above £2,000 a year will be subject to employer and employee NICs from April 2029
Business Tax
- Corporation Tax – no changes to rates
- Capital Allowances – the main rate of Writing Down Allowance (WDA) reduces from 18% to 14% per year from April 2026; a new first year allowance (FYA) of 40% applies from 1 January 2026 for most expenditure on main rate assets
- Venture Capital reliefs – the size limits applying to the Enterprise Management Incentives (EMI) scheme, Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) increase, but Income Tax relief on VCT investment reduces from 30% to 20%
Capital Taxes
- Employee Ownership Trusts and Employee Benefit Trusts – relief for qualifying disposals halves to 50% from 26 November 2025
- Capital Gains Tax – most rates stay the same, but Business Asset Disposal Relief and Investors’ Relief reduce to 18% from 6 April 2026
- Capital Gains Tax annual exemption for 2026/27 remains at £3,000
- Inheritance Tax – the nil-rate band continue to be frozen, now until April 2031
Other measures
- Making Tax Digital for Income Tax Self Assessment starts in April 2026 for those with qualifying income over £50,000 (rolling out for those with incomes over £30,000 in April 2027 and for incomes over £20,000 in April 2028)
- ‘Mansion tax’ – properties valued at £2 million or more will be liable to a new High Value Council Tax Surcharge (HVCTS) from April 2028
- Electric Vehicle Excise Duty (eVED) – a new mileage charge for electric and plug-in hybrid cars applies from April 2028
▶ Download our Autumn Budget Summary (PDF)
If you have any questions regarding the information covered in this summary, or would like advice on a particular area, please get in touch with either your usual contact or any of the UNW Tax partners. Contact details can be found on the final page of this summary PDF.