Autumn Budget 2025

As is often the case in the Budget, it's worth noting the things which were not announced. Stamp duty land tax (SDLT) was barely mentioned in the Budget documentation – no changes to rates and no proposals to abolish it as an unwelcome transaction tax and replace it with something more "progressive" (as had been encouraged in some quarters). Similarly, the 25% main rate of corporation tax has not been changed, although investors will feel the impact of writing down allowances for general pool plant and machinery capital allowances being reduced from 18 per cent per annum to 14 per cent from April 2026. Whilst the impact of this is softened slightly by a new 40% first year general pool allowance, this will ultimately increase taxable profits over the medium term. 

The reform to property income tax rates means that Non-Resident Landlords (who have not applied to receive rents gross) will be subject to withholding at the new basic property income tax rate of 22% from April 2027. Significantly, this will also apply to Property Income Distributions from REITs and PAIFs and so will need to be modelled into returns by investors in these types of fund. 

There was also the usual slew of technical changes, including amendments intended to reduce fraud in the construction industry scheme and changes to the definition of "property rich entity" for the purposes of NRCGT (Non-Resident Capital Gains Tax).   

There was also some relief in the construction sector that the Government has moved away from a previous proposal to abolish the lower landfill tax rate and move to one single rate. In terms of future developments, there is also a statement that the Government will shortly consult on reforming the VAT rules "to incentivise the development of land intended for social housing", although what the detail of this will be remains unclear at this stage. 

Today's Autumn Budget has announced (and in certain cases, reinforced) the Government's intention to crack down on the avoidance of tax. We summarise the measures below.    

Inheritance tax (IHT):  The Government has announced it will legislate to prevent IHT avoidance through certain loopholes, including the following. 

• ensuring UK agricultural property held via non-UK entities is "looked through" and treated as UK-situated, taking effect from 6 April 2026. This is presumably aimed at preventing the "conversion" of UK agricultural property (that is always subject to IHT) into shares in a non-UK company (that are not subject to IHT when owned by individuals who are not long-term residents or by trusts created by such people). This brings agricultural property into line with residential property although UK commercial property can still be sheltered from IHT if held under a non-UK company owned by certain non-resident individuals or by trusts created by such people; 
• addressing changes in the status of trust assets shortly before an exit charge (in order to reduce or eliminate the exit charge). Trustees face a 6% IHT exit charge when non-UK property goes out of scope of IHT (i.e. where a settlor ceases to be long-term resident). The new provisions will prevent trustees from avoiding this charge (which they previously may have done) by shifting the situs of assets, i.e. bringing assets to the UK prior to the change in the settlor's status, then taking the assets offshore again, taking the assets outside the scope of IHT. This change takes effect from today, 26 November 2025; and  
• restricting IHT charity exemptions to gifts made directly to UK charities and community amateur sports clubs, again taking effect from today. Charitable trusts will not be exempted unless they meet the wider definition of a charity under the existing legislation.   

Full details are set out in Finance Bill 2025-26.   

Capital gains tax (CGT):  The Government will modernise the anti-avoidance provisions that apply to share exchanges and company reorganisations with immediate effect from today. As above, full details will be set out in the Finance Bill 2025-26. The Government has additionally mentioned measures regarding non-resident CGT for protected cell companies (PCC). A PCC is a type of company which is made up of separate cells where the assets and liabilities of one cell are segregated and protected from those of the other cells. A company is a UK property rich entity if 75% or more of the gross asset value of the company is UK land. Legislation will amend the property rich test so that in the case of PCCs, each PCC is to be treated and assessed as to whether it is individually a property rich entity, rather than the PCCs together as one company.    

Offshore anti-avoidance: The Government has reinforced its commitment to reforming and simplifying Personal Tax Offshore Anti-Avoidance Legislation. This follows a call for evidence which ended in early 2025. The policy paper reporting on the results of the external engagement is still yet to be published. However, any changes to legislation are not expected to be in place before tax year 2027-28 at the earliest.  

Promoters of tax avoidance schemes: HMRC is introducing a strengthened reward scheme for informants, modelled on the US system which is designed to encourage disclosures that enable HMRC to pursue complex, high-value cases. The Government will introduce new powers to close in on promoters of marketed tax avoidance. The precise details will be published in the Finance Bill 2025-26. The Government will publish a consultation on further measures to tackle promoters in early 2026.   

Temporary non-residence (TNR): This existing anti-avoidance legislation (known as the TNR rules) charges UK tax residents on certain income and gains received during a period of temporary non-residence when they return to the UK (i.e. within five years of originally ceasing UK residence). There is currently no charge to UK tax if a distribution or dividend is made from ‘post departure trade profits’ (being profits that accrue to a company after the individual has left the UK). This new measure will add the concept of ‘post departure trade profits’ to the TNR rules. It will therefore ensure that all distributions or dividends received from a close company while a taxpayer is temporarily non-resident will be chargeable to income tax if a taxpayer is caught by the TNR rules. This is to take effect on 6 April 2026. 

The chancellor has announced a potentially significant rebalancing of the business rates system. This will come into force in April 2026, coinciding with the nationwide revaluation of business premises.   

There will be a new, lower multiplier for smaller retail, hospitality and leisure premises, balanced by a higher multiplier for business premises with a rateable value of £500,000 or more.   

The standard multiplier for 2025/26 is 55p. The equivalent for 2026/27 will be 48p, but of course this is not a tax cut, as all premises are being revalued with effect from 1 April 2026.   

It is clear there will be winners and losers.  The Government says over half of ratepayers will see either no increase or a reduction, but clearly larger occupiers will bear the brunt of the change. A support package will be provided to cushion the burden for some businesses facing an increase in their rates bills.     

It has been reported that larger supermarket chains had been expecting a reprieve from the increased charges for higher value premises. In the event, they have not been exempted from this increase. Some have warned that shoppers may face higher prices as a result. Investment values and occupational rents may also be affected.   

The Government also says it is "continuing work to transform business rates by publishing a call for evidence exploring how to tackle barriers to investment". Keen followers of the rating system will know that similar consultations have been conducted in previous years, with minimal change resulting. 

Today the Government announced the introduction of a new VAT relief for business donations of goods to charity for onward distribution or for use by the charity in its non-business activities, at an expected cost of £10 million per tax year.  

Under the current rules, when a VAT-registered business donates goods that it could otherwise have sold, HMRC treats the donation as a taxable "deemed supply". This means the business must account for output VAT based on the market value of the goods.   

From 1 April 2026, where a donation meets the conditions of the new relief, the business will not need to charge or account for VAT on donated goods.    

Goods must be donated for distribution by the charity to beneficiaries or for use in the charity’s own non-business service delivery (for example, shelters, community kitchens or other free charitable services).    

The relief is subject to item-value thresholds: a general cap of £100 per item, and a higher £200 cap for essential goods frequently required by charities, such as white goods, furniture and specified electronics (including computers, tablets and mobile phones).    

The relief only applies where donations are made to charities registered with HMRC for tax purposes and, where required, charities registered with the Charity Commission (England & Wales), OSCR (Scotland) or the Northern Ireland Charity Commission. The relief will not apply to community interest companies, social enterprises or unregistered bodies. 

The intended impact of this relief is to increase donations of goods by businesses to charity, particularly from SMEs, and reduce the volume of surplus usable goods sent to landfill. This is an environmentally friendly measure that has the added benefit of helping charities provide essential items and services. 

Following a consultation earlier this year, the Government has confirmed that it will not be proceeding with its proposal for a single remote betting and gaming duty. Instead, it will increase duties on remote gambling, with different rates for betting and gaming.  The changes announced by the Government are:   

• From 1 April 2026, Remote Gaming Duty (RGD) will increase from 21% to 40%. RGD is payable on gross gambling profits from remote gaming products, including online casino games and bingo.      
• From 1 April 2027, a new 'Remote Betting Rate' will be introduced for remote sports betting, as a subset of General Betting Duty (GBD). This will raise the tax currently payable on the gross profits from remote sports betting from 15% to 25%. Remote bets on horseracing will be exempt from this new rate, meaning that duty on remote horserace betting will remain at 15%. Spread bets and pool bets will also be exempt from this new rate, as will bets placed via self-service betting terminals.   
• From 1 April 2026, Bingo Duty will be abolished. Bingo Duty is currently set at 10%, payable on the gross profits of land-based bingo businesses.    
• The Gross Gaming Yield bandings for Gaming Duty will be frozen from 1 April 2026 until 31 March 2027. 

There will be no change to the tax rates payable on the profits of bricks and mortar betting shops and casinos, and no change to Machine Games Duty (i.e. the profits from slot machines and betting terminals); nor will there be any change to Lottery Duty or to Pool Betting Duty.     

The OBR has forecast that these changes will raise £1.1 billion for the Treasury by 2029-2030. The Betting and Gaming Council has previously warned that a significant tax increase will effectively function as a 'punters tax', with customers likely to experience worse odds and reduced offers as operators pass on these higher costs. The industry's concern is that this, in turn, risks driving customers towards the unregulated black market, potentially undermining both consumer protection and the Treasury's revenue objectives.  This concern is also reflected in the OBR's report, which estimates that the pass through of costs and resulting reduction in consumer demand – including because of 'potential substitution to the illicit market' – will reduce tax yield by £0.5 billion by 2029-2030.   

In response to these concerns, the Budget also allocates an additional £26 million of funding to the Gambling Commission over the next three years to tackle the black market. 

Following the 2023 call for evidence on the tax-advantaged share schemes SAYE and SIP, the Government has published its summary of responses to submissions received from employees, industry groups, advisers and businesses.  

No changes to SAYE or SIP have been made at this time.   

Employer and employee National Insurance contributions (NICs) will be charged on pension contributions above £2,000 per annum made via salary sacrifice. The changes will take effect from 6 April 2029.   

Salary sacrifice is a valued and fundamental feature of workplace pensions and this measure seems somewhat counterintuitive in both increasing costs for employers offering workplace pensions and in discouraging retirement savings by employees.   

Under the 2025 Autumn Budget, the Government introduced a £1 million cap on 100% Business Property Relief (BPR) and Agricultural Property Relief (APR), after which a 50% relief applies (with effect from 6 April 2026). It was also announced that the £1 million allowance would be non-transferable between spouses/civil partners where it was unused on the first death (in contrast to the Nil Rate Band, which is transferable). Despite this issue being raised during the consultation process, the Government rejected calls for change and maintained its non-transferability position.   

In a significant reversal of its previous stance, the Government has today announced that the £1 million allowance will be transferable between spouses. This is a surprising development given the Government's rejection of this proposal during consultation but represents a welcome change for business owners and farmers.    

With the allowance now transferable, it is no longer necessary to structure wills specifically to "bank" the allowance on the first death. This simplifies estate planning for married couples and civil partners owning agricultural or business assets, allowing greater flexibility in how assets are left without risking the loss of valuable relief. 

The Government will introduce a £5 million cap on the inheritance tax (IHT) charges that can apply to relevant property trusts which were established by non-UK domiciled individuals pre-30 October 2024. This will be legislated for in the Finance Bill 2025-26 and will apply to trust charges from 6 April 2025. This will be a £5 million cap on the total IHT charges such a trust could pay over each 10 year period (with each trust having its own £5 million cap). This change will be relevant for non-UK domiciled individuals with pre-existing trust structures that hold significant wealth (in excess of £83 million).       

Under the new rules introduced from 6 April 2025, where the settlor of an excluded property trust has been UK tax resident for 10 of the last 20 years, they are now categorised as long-term-resident (LTR), with the consequence that the full value of their trusts now fall within the "relevant property regime", subjecting the total capital value of the trust to 6% IHT charges every 10 years and proportionate exit charges when capital is paid out of the trust. This was a very significant change, in response to which some individuals decided to wind up their existing trust structures.     

Under the new change announced today, where a trust was established before 30 October 2024 by a non-UK domiciled settlor (i.e. an excluded property trust), the 10-yearly 6% IHT charge will be capped at a maximum of £5 million, even where that settlor has now acquired LTR status. This would result in a saving for any trusts holding taxable assets worth more than £83 million.   

This is a significant concession in relation to some of the non-dom changes introduced in last year's budget, especially since it will apply to trust charges from 6 April 2025. It is likely to be a response to the clear evidence that many wealthy and talented former non-doms are leaving the UK, resulting in reduced employment, spending and charitable giving. 

All relevant IHT thresholds have been frozen for an additional year beyond the previously announced freeze period. The thresholds were originally frozen until April 2030, but will now remain frozen until April 2031.   

This extended freeze applies to: 

• The Nil Rate Band (frozen at £325,000); 
• The Residence Nil Rate Band (frozen at £175,000); and 
• The £1 million allowance for 100% BPR/APR relief.   

The extended freeze means that fiscal drag will continue to bring more estates into the inheritance tax net as asset values increase with inflation whilst thresholds remain static. 

The current income tax thresholds will remain frozen at £12,570, £50,270 and £125,140 for a further three years from April 2028 to April 2031, meaning more taxpayers are likely to be pulled into higher income tax bands as well as self-assessment and the need to file annual tax returns.    

The Government also announced the following changes to income tax rates for dividend, savings and property income:   

• From April 2026, both the ordinary and upper income tax rates for dividend income will be increased by 2%. The ordinary rate for dividend income will therefore rise from 8.75% to 10.75% and the upper rate will increase from 33.75% to 35.75%. The additional rate for dividend income will remain at 39.35%. 
• From April 2027, income tax rates on savings income will also be increased by 2% on the basic, higher and additional rates. Following this change, the basic rate for savings income will be 22%, the higher rate will be 42% and the additional rate will be 47%.  
• From April 2027, separate tax rates will be introduced for property income. The basic rate for property income will be 22%, the higher rate will be 42% and the additional rate will be 47%.  

The above represents a significant change to the taxation of non-employment income and is designed to remove the anomaly under which individuals currently pay an effective lower rate of tax on dividend, savings and property income as national insurance contributions are not paid on these. In time this is likely to lead to a shift away from direct investing for income to investing for growth considering capital gains are taxed at lower rates and CGT rates were not increased. It may also encourage indirect investment in shares via ISAs and pensions. Increased tax rates on rental income will particularly hit buy to let landlords, many of whom are older and are already considering selling up due to the introduction of the Renters Rights Act. Whether this will depress prices for residential investment properties or simply push rents up further to compensate landlords for the extra tax remains to be seen. 

The EIS and VCT schemes have been around for several years and have been successful in encouraging investment into fast growing new companies through the provision of various tax reliefs. The Government has announced several changes to these schemes which will widen the scope of companies eligible to attract further investment. The key changes are: 

• the gross assets requirement that a company must not exceed for EIS and VCT has been increased to £30 million (from £15 million) immediately before the issue of the shares or securities, and £35 million (from £16 million) immediately after the issue 
• the annual limit placed on the amount EIS and VCT companies can raise has increased to £10 million (from £5 million). Similarly, for companies that qualify as knowledge-intensive companies (KIC) they can now raise up to £20 million (from £10 million) 
• the overall amount that a company can raise under EIS or VCT over its lifetime has increased to £24 million (from £12 million) and for KICs to £40 million (from £20 million) 

The sting in the tail, however, is that the income tax relief available to individual investors for VCT investments has decreased from 30% to 20%. 

The loan charge was announced at Budget 2016 and legislated by Parliament in the Finance (No. 2) Act 2017. The intention of the loan charge was to tackle the historical use of contrived tax avoidance schemes that sought to avoid income tax and National Insurance by disguising income as allegedly non‑taxable loans. The charge created a new tax liability by aggregating outstanding disguised remuneration loans and taxing them in the 2018–19 tax year. While the courts have ruled that such schemes do not succeed in avoiding tax, the loan charge faced criticism for bringing amounts into charge even where HMRC had not protected its position by opening an enquiry, and for the way it aggregated outstanding loans within a single tax year.   

The Loan Charge Review made nine recommendations. The Government accepted all but one of the Review’s recommendations. Most significantly, the Government accepted the main recommendation to establish a new settlement opportunity for those with outstanding loan charge liabilities. The one recommendation that the Government did not accept was that there should be a maximum ten‑year period for any payment plan agreed with HMRC, with liability that remains outstanding to be suspended. This was rejected on the basis that it would lead to unnecessary and potentially protracted negotiations between taxpayers and HMRC and would not support the objective of drawing a line under the matter. The criticisms of HMRC not acting in a timely fashion against the promoters of the loan schemes have also been recognised, and DOTAS (Disclosure of Tax Avoidance Schemes) and DASVOIT (Disclosure of Tax Avoidance Schemes for VAT and Other Indirect Taxes) are to be updated, among other changes, to allow an authorised officer of HMRC to impose fines rather than the First‑tier Tribunal.  

The Government is to legislate in the forthcoming Finance Bill in respect of all these changes and will also allow HMRC to administer them.  

This is a positive conclusion, as it will allow a line to be drawn under the issue and enable HMRC to rebuild trust among those caught out by the promoters of the schemes. The new settlement opportunity should also assist in ensuring discussions with HMRC take place in a more controlled way, without unnecessary costs associated with the loan charges or tax‑related HMRC enquiries. 

In a significant and unexpected move by the Government, it was announced that Capital Gains Tax (CGT) relief available on qualifying disposals to Employee Ownership Trusts (EOTs) will be reduced from 100% of the gain to 50% from 26 November 2025. This effectively imposes a 12% CGT charge on a disposal to an EOT (based on the 24% rate for most taxpayers). This will undoubtedly have repercussions on the use of EOTs, which have grown in popularity over recent years, and is likely to make them relatively less attractive compared to a trade sale or sale to a private equity buyer where the purchase price is generally paid up front. Founders and entrepreneurs will be disappointed that a relief that is now widely used and achieves its aim of encouraging employee engagement and ownership is a victim of its own success.   

The Government has introduced a new UK Listing Relief, a three-year exemption from Stamp Duty Reserve Tax for companies listing in the UK. Taking effect from 27 November 2025, transfers of a company’s securities will be subject to relief from the 0.5% Stamp Duty Reserve Tax charge for three years from the point the company lists on a UK regulated market. This is intended to encourage scaling companies to list in the UK and further supports the development of the new Private Intermittent Securities and Capital Exchange System (PISCES).   

As expected, the Government has confirmed that it will allow existing EMI and CSOP contracts to be amended to include PISCES as an exercisable event. The legislation applies to contracts agreed before 6 April 2028, and the changes take effect retrospectively from 15 May 2025. 

In a welcome modernisation of the Enterprise Management Incentives scheme (EMI), eligibility criteria have been relaxed to allow more established, larger scale-ups to join smaller start-ups in offering tax-advantaged shares to their key staff.   

From April 2026:   

• The employee limit has increased from 250 to 500  
• The gross asset limit has increased from £30 million to £120 million  
• The company share option limit has increased from £3 million to £6 million  
• The maximum holding period has increased from 10 years to 15 years in respect of existing EMI contracts  

These reforms address concerns that the current EMI scheme had not kept pace with today's scale-up economy and are aimed at attracting and retaining talent for start-up and scale-up UK companies while reducing the compliance burden.   

A new high value council tax surcharge. From April 2028 owners of properties valued at over £2 million will be liable for an annual charge in addition to existing council tax liability. This will consist of four bands, from £2,500 for a property valued in the lowest band of £2 million to £2.5 million, to £7,500 for a property in the highest band of £5 million or more, with the surcharge to be updated by CPA inflation each year. It is unclear whether the bands themselves will also be inflation-linked. Questions remain over which valuation date will apply, or the effect of post-valuation capital improvements for banding purposes. Where an affected property is rented, the liability for the surcharge will fall on the landlord, whilst the tenant will continue to pay the standard council tax.

After months of headline-grabbing speculation the proposed council tax surcharge on properties worth over £2 million is more modest than a true ad valorum "mansion tax" that many feared, particularly as it is capped at £7,500. 

Whilst there may be initial stalling at the top end of the market and possible negotiations to factor in the new surcharge, this is essentially a small adjustment to the existing council tax system and for high value homeowners the surcharge is still minimal compared to the value of their properties. We consider the top end of the market is unlikely to see any significant disruption and the wider UK housing market will remain unaffected. Added to that, the charges will not come into effect until 2028, giving the market years to absorb the idea. Affected older homeowners on lower incomes and with limited capital will be concerned about how to fund the surcharge, although we expect there to be reliefs allowing the charge to be deferred until sale or death.  

Overall, the long-awaited clarity is likely to encourage a renewed surge in market activity as buyers and sellers regain confidence after months of uncertainty.