On 26 November, the Government published the Autumn Budget 2025, introducing a series of structural tax reforms and rate adjustments designed to address inflationary pressures, incentivise long-term investment and rebalance the tax burden across wages, savings, dividends and property income. The changes announced will have a direct impact on employers navigating rising payroll and compliance costs, landlords exposed to increasing taxation on rental income, and company directors needing to reassess extraction strategies ahead of rate increases. Individuals with significant savings or investments will also see notable adjustments to how their income is taxed over the next two to three years.
Below, we set out the key measures from the Budget, together with HMRC and HM Treasury references, to ensure our clients have a clear and accurate understanding of what lies ahead.
1. Minimum Wage Increase – April 2026
The new National Minimum Wage and National Living Wage from April 2026 will be:
- Age 21 and over: £12.71 per hour (previously £12.21)
- Age 18–20: £10.85 per hour (previously £10.00)
- Age 16–17: £8.00 per hour (previously £7.55)
- Apprentice rate: £8.00 per hour (previously £7.55)
Estimated annual cost increase for a full-time employee on NMW (40 hrs/week):
- Wage increase: £1,040
- Employer pension: £32
- Employer NIC: £156
- Total increase: £1,228
- Corporation Tax saving (19%): (£233)
- Net additional cost: £995
HM Treasury – Budget 2025 Documentation (Minimum Wage & Fiscal Measures)
2. Dividend Tax Rate Increase – April 2026
Dividend tax rates rise from 6 April 2026:
- Basic rate: 10.75% (previously 8.75%)
- Higher rate: 35.75% (previously 33.75%)
- Additional rate: 39.35% (unchanged)
This results in £2 extra tax per £100 of dividends for basic and higher-rate taxpayers.
Section 455 tax on overdrawn directors’ loans will also increase to 35.75%.
HM Treasury – Income Tax: Changes to Tax Rates for Property, Savings & Dividend Income
3. Separate Tax Rate for Savings & Rental Income – April 2027
From April 2027, savings and rental income will be taxed separately:
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
This is equivalent to £2 more tax per £100 compared with current rules.
HMRC – Technical Note: Savings & Property Income Tax Reform (April 2027)
4. ISA Allowance Reform – April 2027
The £20,000 ISA allowance will be split for those under age 65:
- Cash ISA: £12,000
- Stocks & Shares ISA: £8,000 (mandatory minimum)
Those aged 65+ may continue to allocate all £20,000 to cash.
GOV.UK – ISA Reform Consultation Response (Allowances from April 2027)
5. Electric Vehicle Road Charge – April 2028
From April 2028, EV and hybrid drivers will face a new road levy:
- Electric Vehicles: 3p per mile
- Plug-in Hybrids: 1.5p per mile
HM Treasury – Electric Vehicle Excise Duty Consultation
6. Mansion Surcharge – April 2028
A new High Value Council Tax Surcharge will apply:
- Properties £2m–£5m: £2,500 per year
- Properties £5m+: £7,500 per year
HM Treasury – High Value Council Tax Surcharge (2028)
Summary – Who Will Be Most Affected?
- Employers managing rising payroll costs
- Landlords with UK rental income
- Individuals with substantial savings or investments
- Company directors extracting dividends
- Owners of high-value residential properties
- EV owners (from 2028)
If you would like tailored advice on how the Autumn Budget 2025 may impact your business or personal tax position, our team is here to help. Please contact your dedicated F9 client manager or reach out to us directly using the details below:
📞 Call us: 01277 223278
✉️ Email us: sales@f9consulting.co.uk
🌐 Visit us: www.f9consulting.co.uk
