2025 Autumn Budget – Key Considerations

Income tax thresholds staying frozen

The Personal Allowance remains at £12,570 and the higher rate threshold stays at £50,270 through to 2030 to 2031.

This long freeze may not feel dramatic now, but as earnings rise over time, more of your income will fall into higher tax bands. This is one of the quieter ways tax increases happen and it makes the use of pensions and ISAs more important than ever.

Dividend tax rising from April 2026

Dividend tax rates will increase as follows:

• Basic rate: 8.75% to 10.75%
• Higher rate: 33.75% to 35.75%
  • The additional rate will remain unchanged at 39.35%

The Dividend Allowance remains at £500.

Tax on Savings Income will increase by 2% from April 2027

• The basic rate will rise from 20% to 22%
• The higher rate from 40% to 42%
• The additional rate from 45% to 47%

This affects investors with assets held outside wrappers and business owners who take dividends. It is an ideal time to reassess remuneration strategies and wider portfolio structure.

More tax on property income and savings income

The government has stated clearly that it expects income from assets to contribute more than it does today. As a result:

• Property income will face higher tax
• Savings income outside tax efficient wrappers will become less attractive
• A High Value Council Tax surcharge will apply to homes worth more than £2,000,000

This shift creates a stronger incentive to position assets in the right structures.

Salary sacrifice pension contributions capped

From April 2029, only the first £2,000 per person per year of pension contributions via salary sacrifice will avoid National Insurance.

Anything above £2,000 will be subject to employer and employee National Insurance.

This reduces the efficiency of larger contributions in future. The years between now and 2029 are an important window for those who want to maximise pension funding while the full efficiencies still apply.

Using today’s allowances has never been more valuable

With frozen tax thresholds, higher rates on investment income and upcoming changes to pensions, the value of using your allowances fully each year has increased.

This includes:

• Your £20,000 ISA allowance
• Your pension annual allowance, which can be as high as £60,000
• Higher pension contributions made before the salary sacrifice cap arrives
• Capital Gains Tax allowances where suitable

Good planning here can reduce the lifetime tax you pay in a very meaningful way.

ISA changes from 2027

From April 2027:

• The overall ISA limit remains £20,000
• The Cash ISA limit will be £12,000 for most savers
• Clients aged 65 and over will have a higher Cash ISA limit
• The Starting Rate for Savings remains at £5,000 until at least 2031

Lifetime ISA update
The government will consult in early 2026 on a new, simpler ISA for first time buyers. Once launched, it will replace the Lifetime ISA.
For now, nothing changes and the Lifetime ISA allowance remains £4,000 per year until 5 April 2031.

EIS and VCT changes

From April 2026:

• Companies can raise more through EIS and VCT due to increased gross assets limits
• VCT income tax relief expected to reduce from 30% to 20%
• EIS investor relief remains unchanged

These remain specialist, higher risk tools that still have a place for the right client in the right context.

State Pension and cost of living support

• The State Pension will increase by 4.8% in April 2026 under the triple lock
• Energy bills are expected to fall by around £150 per household
• Rail fares will be frozen for one year
• Prescriptions remain at £9.90

These measures offer short term support but do not significantly change long term planning considerations.

Agricultural and business property relief

There is one specific update for clients with farms or trading businesses. From 6 April 2026, any unused £1,000,000 allowance for the 100% rate of Agricultural Property Relief or Business Property Relief will be transferable between spouses and civil partners, even if the first death occurred before that date.

This will not affect most clients, but it is a helpful change for families with qualifying agricultural or business assets and may be worth revisiting as part of wider estate planning.

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Less obvious but still relevant changes

There are a few smaller items in the Budget that may not make headlines but are still worth knowing:

Help to Save becomes permanent

Eligibility widens for those receiving the child element or caring element of Universal Credit.

Technical pension changes

There are new administrative rules for death benefits and the handling of Inheritance Tax. These mainly affect larger estates and older trust arrangements.

Trust and Inheritance Tax tightening

A small number of targeted rule changes apply to specific trust structures and non UK assets.

Electric Vehicle Excise Duty

A per mile tax for electric and plug in hybrid vehicles will be introduced from April 2028.

Employer tax exemptions

Reimbursement for eye tests, home working equipment and flu vaccinations will become tax exempt from April 2026.

These items will not affect every client directly, but are useful for awareness and can be worked into planning where relevant.

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What this means for you

You might find that your tax position shifts over time even if your income only rises gently

The frozen thresholds mean more of your earnings can drift into higher tax bands without you doing anything differently. It is worth pausing to think about whether your current structure still works as well as it could.

It may be a good moment to look at how your savings and investments are arranged

With higher taxes on dividends, property income and savings income, the way your assets are held can make a noticeable difference. Even small adjustments can improve long term efficiency.

Your retirement strategy may benefit from a check in

The upcoming changes to salary sacrifice do not affect you immediately, but they do change the landscape in the years ahead. Thinking through contribution levels and timing now can help you stay ahead of the rules.

Using today’s allowances could make a meaningful difference over time

The ISA allowance, pension allowance and other annual limits are still generous by historical standards. Making good use of them each year can significantly improve long term outcomes, especially with the direction tax policy is moving.

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How AMFA can support you

At AMFA we have already begun reviewing these changes with clients. Our focus is to ensure your plan remains tax efficient, resilient and aligned to your long term goals.

We can help you by:

• Reviewing your tax position under the extended threshold freeze
• Optimising the order in which you use pensions, ISAs and general investments
• Checking your pension contribution structure ahead of the £2,000 salary sacrifice cap
• Reviewing remuneration strategies for business owners
• Assessing whether EIS or VCT opportunities remain relevant
• Updating estate planning where property or trust changes may apply

If you would like to understand exactly how the Budget affects your situation, please contact your adviser and we will be happy to talk it through.

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