Understanding the Latest 2025 Budget Changes and What They Mean for You and Your Business
The Government delivered the 2025 budget today. Whilst the speech contained some attention-grabbing announcements, as always with taxation the devil is in the detail. At Welf, we’ll be wading through that detail over the coming days. In the meantime, we wanted to provide a top-level summary. The implications of today’s announcements will need to be calculated, and we’ll have to factor these changes into our clients tax and renumeration strategies and take mitigative action where possible, in due course.
Suffice to say, however, this budget will negatively impact the majority of owner-managers and despite the Chancellor’s rhetoric about supporting business, she has taken aim squarely at OMBs. Any tacit understanding that risk-taking in the form of enterprise should be rewarded by a lower tax rate has now been long disregarded.
Here is our summary of the key headlines of the 2025 budget;
Income Tax and National Insurance
The current personal tax thresholds will now be frozen for an additional three years, until 2031.
From April 2029, the Government will charge employee and employer National Insurance on any pension contributions made via salary sacrifice above £2,000 a year.
From April 2026, there will be a two percentage point increase to the basic and higher rates of tax on dividends, raising them to 10.75% and 35.75% respectively.
From April 2027, there will be a two percentage point increase to the basic, higher and additional rates of saving income tax, increasing them to 22%, 42% and 47% respectively.
From April 2027, there will be a two percentage point increase to the basic, higher and additional rates of property income tax, increasing them to 22%, 42% and 47% respectively.
ISA Limits for Cash will be capped (for under 65s) to £12,000 p.a. from April 2027
The minimum wage for over-21s to increase to £12.71 from April 2026 (£10.85 for 18-20 year-olds)
Corporation tax
The Government will reduce the writing down allowance main rate from 18% to 14% from April 2026, alongside a new 40% first-year allowance from January 2026.
Capital gains tax
The capital gains tax relief on disposals to employee ownership trusts will be reduced from 100% to 50% from November 2025.
Excise duties
From 2028, the Government will introduce a new mileage-based charge on battery electric and plug-in hybrid cars at around half the fuel duty rate paid by drivers of petrol cars.
From April 2026 there will be an increase in remote gaming duty from 21% to 40% and the bingo duty will be abolished.
From April 2027, a new rate of general betting duty for remote betting will be introduced at 25%, excluding self-service betting terminals, spread betting, pool bets and horseracing.
The Government will implement a further five-month freeze to fuel duty rates until September 2026 at which point the five pence cut first introduced in 2022 will be reversed through a staggered approach. The planned inflation increase for 2026–27 has been cancelled. From April 2027, fuel duty rates will then be uprated annually by RPI.
Other Commitments
The introduction of a new high value council tax surcharge. From April 2028, owners of properties identified as being valued at over £2m by the Valuation Office (in 2026 prices) will be liable for a recurring annual charge which will be additional to existing council tax liability.
The removal of the two-child limit in full from April 2026.
Planning for the Future
At Welf Accountants, we’re committed to staying on top of these developments and supporting you through the changes. For clients where these adjustments present specific challenges, we’ll reach out with tailored advice. For others, we’ll continue monitoring the situation and recommend updates as relevant.
Our goal is to ensure you’re prepared, informed, and well-equipped to handle any tax implications. Don’t hesitate to reach out if you’d like a detailed review of how these changes may affect your business or personal tax position.