Households and businesses alike face a difficult time ahead following Rachel Reeves’ November 2025 Budget. With a variety of tax increases alongside numerous stealth taxes there will be few individuals or business owners who will escape unscathed. With the tax revenue committed to fund improvements in public services and welfare alongside plugging some of countries ‘black hole’, much the UK will be following closely to see whether this difficult Budget delivers against these promised changes.
Corporation tax rates remain unchanged at 25% main rate and 19% small profits rate from 1 April 2026.
The main rate writing down allowance will decrease by four percentage points to 14% from April 2026. However, there will be a new 40% first-year allowance for main rate assets. Cars, second-hand assets and assets for leasing abroad will not qualify. The 100% annual investment allowance will remain.
There is some relief on businesses in retail, hospitality and leisure with new permanently lower business rates multipliers being set at 5p below their national equivalents. Making the multiplier for small businesses in these sectors multiplier 38.2p and the standard multiplier 43p. To fund these reductions, the multiplier for properties with rateable values of £500,000 and above will be 2.8p above the national standard multiplier, making it 50.8p in 2026/27.
Despite some speculation the VAT registration threshold will remain at £90,000 from 1 April 2026. The deregistration threshold will be £88,000.
A relief for business donations of goods to charity for onward distribution or use in the delivery of their services will be introduced from 1 April 2026.
The penalty for late submissions of corporation tax returns will be doubled from 1 April 2026.
Penalties for late submissions and late payments under MTD will apply to all income tax self assessment (ITSA) taxpayers who are not already due to join the new system from 6 April 2027. Penalties for late payment of ITSA and VAT will rise from 1 April 2027.
New powers will be introduced from 1 April 2026 to ensure that MTD and the new penalty
reform legislation works as intended.
The IHT nil rate band will remain at £325,000 and the residence nil rate band will stay at £175,000, with its associated taper threshold remaining at £2 million. These levels will be frozen for a further year to the end of 2030/31.
Any unused £1 million allowance for the 100% rate of agricultural property relief and business property relief will be transferable after death between spouses and civil partners, including where the first death was before 6 April 2026, which echoes the transferability rules for nil rate bands.
Personal representatives will be able to direct pension scheme administrators to withhold 50% of taxable benefits for up to 15 months and pay the IHT due in certain circumstances. Personal representatives will be discharged from a liability for IHT payment on pensions discovered after they have received clearance from HMRC.
With retrospective effect from 6 April 2025, there will be a cap of £5 million on relevant property trust charges for pre-30 October 2024 excluded property trusts
HMRC will be given stronger powers to tackle fraud in the construction industry scheme (CIS) from April 2026.
The CGT annual exempt amount for individuals and personal representatives will remain at £3,000 for 2026/27. The annual exempt amount for most trusts will stay at £1,500 (minimum £300). CGT rates The lower main rate of CGT will remain at 18% and the higher main rate will remain at 24% for disposals made in 2026/27.
As previously announced, the rate for business asset disposal relief and investor’s relief will increase to 18% from 6 April 2026.
Employer and employee NICs will be charged on pension contributions above £2,000 a year made via salary sacrifice from 6 April 2029.
Pensioners whose sole income is the basic or new state pension (without any increments) will not have to pay small amounts of tax through simple assessment from 2027/28 if their state pension exceeds the personal allowance. It’s not yet clear what ‘small amounts of tax’ means in real terms – more detail on this will be announced next year.
The annual subscription limits will remain at £20,000 for ISAs, £4,000 for lifetime ISAs and £9,000 for junior ISAs and child trust funds for 2026/27. However, the maximum annual cash ISA subscription will be reduced to £12,000 from 6 April 2027 for those aged under 65.
Significant increases to the NLW and NMW were announced the day before the Budget on 25 November 2025. With a 4.1% increase for those 21 and over to £12.71 and 18-20 year olds receiving an 8.5% increase to £10.85. The National Minimum Wage for 16-17 year olds and apprentices was increased by 6% to £8.00 per hour.
Whilst the anticipated increases to income tax did was not included, the personal allowance for 2026/27 will remain at £12,570, with the higher rate threshold at £50,270 and the additional rate threshold at £125,140. The freeze to these thresholds will be extended for another three years, up to and including 2030/31.
The 0% band for the starting rate for savings income for 2026/27 will remain at its current level of £5,000.
The ordinary and upper rates of tax on dividend income will rise by two percentage points to 10.75% and 35.75% from April There will be no change to the dividend additional rate of 39.35%. The dividend allowance will remain at £500 for 2026/27.
From April 2027, the tax rate on savings income will rise by two percentage points across all tax bands to 22%, 42% and 47%.
A new set of tax rates will apply to property income from April 2027. The property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. The changes to property income rates will apply in England, Wales and Northern Ireland.
The income tax rules will be changed from 6 April 2027 so that reliefs and allowances deductible in income tax calculations will only be applied to property, savings and dividend income after they have been applied to other sources of income.
The NIC thresholds for employees and self-employed individuals will be frozen at their current levels for a further three years from April 2028 to April 2031. The class 1 secondary threshold will also be held at its current level of £5,000 from April 2028 to April 2031.
Access to pay voluntary class 2 NICs abroad will be removed from 6 April The period of initial residency or contributions required to pay any voluntary NICs outside of the UK will be increased to ten years. The government will also launch a wider review of voluntary NICs with a call for evidence in the new year.
A new mileage charge for electric and plug-in-hybrid cars (PHEV) will come into effect from April 2028. Drivers will pay for their mileage alongside their existing vehicle excise duty (VED) at rates of 3p a mile for fully electric vehicles and 1.5p a mile for plug-in hybrids.
From 1 April 2026, the threshold for VED expensive car supplement for new EVs will be increased by £10,000 to £50,000.
Planned changes to benefit-in-kind rules for employee car ownership schemes will be deferred until April 2030. For those still in contracts at that time, transitional arrangements will also be introduced to provide additional support.
With retrospective effect from 1 January 2025 until 5 April 2028 a temporary easement will apply to mitigate the increased benefit-in-kind tax liabilities of PHEV company cars due to new emission standards. Transitional arrangements will apply to certain vehicles until 5 April 2031.
A high value council tax surcharge (HVCTS) will be introduced in England from April 2028 for residential properties worth £2 million or more, based on updated valuations to identify properties above the threshold.
The charge will start at £2,500 a year, rising to £7,500 a year for properties valued above £5 million and it will be levied on property owners rather than occupiers. Local authorities will collect the charge on behalf of central government.
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