The Autumn Budget 2025 brings a wide range of changes that will affect households, company directors, small businesses and investors. With tax rises, frozen thresholds and new spending plans shaping the economic landscape until the end of the decade, it is more important than ever to understand how these changes impact your finances.
Below, we break down the key announcements in clear, practical terms so you know what action to take ahead of the new tax year.
Dividend Tax Is Rising, How This Affects Directors
One of the biggest announcements is the increase in dividend tax rates from April 2026. Rates will rise by 2 percentage points, which may feel small at first glance but could have a noticeable impact on director shareholders who rely on dividends as part of their income strategy.
What this means in practice
• Higher rate taxpayers will see the biggest increase in cost
• Anyone extracting profits through a low-salary, high-dividend model should review their strategy
• Family companies may need to rethink income distribution between shareholders
The rise comes at a time when many other thresholds remain frozen, which quietly pushes more people into higher tax bands each year.
If you are a company director, this is a good time to revisit how you balance salary, dividends, pension contributions and benefits.
Frozen Income Tax and National Insurance Thresholds Until 2031
One of the most significant long-term measures is the decision to freeze all main personal tax and National Insurance thresholds until April 2031.
This means the tax system will not adjust for wage growth or inflation. As salaries increase over time, more people will be pulled into higher tax brackets, even if their real income has not increased.
What you may notice
• More of your income taxed at higher rates
• Reduced take home pay over time
• Businesses may face rising employment costs as employees feel the squeeze and negotiate for higher wages
This measure alone is expected to increase government revenue substantially over the
New High Value Property Charge from 2028
If you own or invest in high value property, there is a new annual charge coming.
From April 2028, properties worth over £2 million will attract a yearly “High Value Council Tax Charge”.
The rates will be:
• £2,500 per year for properties valued between £2 million and £2.5 million
• £7,500 per year for properties over £5 million
This will apply to both owner occupied and investment properties. If you have a property portfolio, build this cost into your long term planning.
Support for Households and Families
While many of the measures focus on raising revenue, there is some support for families and individuals, including:
Removal of the two child benefit cap
From April 2026 there will no longer be a limit on the number of children eligible for certain benefits. This is expected to support many lower income families.
Reduced energy bills from April 2026
Through changes to renewable obligations, many households are expected to see around £150 knocked off their annual energy costs.
Increased public spending
Spending plans show public investment rising by around £32 billion per year by 2029–30, compared with previous forecasts.
This includes investment in schools, hospitals and local infrastructure, although details will develop further in the Spring Budget.
Key Business Measures to Pay Attention To
For limited companies, there are several points that could influence how you plan over the next few years.
Electric and low emission company cars
The government continues to support cleaner transport, and incentives remain in place for businesses using electric and zero emission vehicles. If you are considering upgrading your company fleet, the current framework still offers attractive tax advantages.
Changes to pension salary sacrifice rules
From April 2029, only the first £2,000 of pension contributions via salary sacrifice will be exempt from NICs. This will affect many employers and employees who use this structure as a tax efficient benefit.
Investment reliefs and allowances
Some capital allowances and business incentives are tightening. Companies purchasing plant or machinery should check the rules carefully, as reliefs may be reduced or restructured over time.
If you are planning any major business purchases or investments, reviewing them now could avoid a less favourable tax position later.
The Economic Outlook, What the OBR Predicts
Alongside the Autumn Budget, the Office for Budget Responsibility (OBR) published its updated economic forecast. Key points include:
Growth
GDP growth is expected to remain modest at around 1.4 to 1.5 percent per year.
Inflation
Inflation is expected to stay above the 2 percent target in the short term, though several Budget measures aim to ease pressure where possible.
Real household income
Forecasts show that by early 2031, household incomes may only be slightly higher than pre-pandemic levels once inflation is taken into account.
Productivity
Productivity growth remains weak, which continues to place pressure on both wages and long-term economic performance.
This backdrop highlights why tax planning and careful cash flow management are more important for households and businesses alike.
What Business Owners and Directors Should Do Now
To stay ahead of these changes, consider taking the following steps:
1. Review your income extraction strategy
With dividend taxes rising, directors may benefit from adjusting the balance between salary, dividends and pension contributions.
2. Update cash flow forecasts
Frozen thresholds, rising operating costs and slower economic growth mean budgets may need tightening.
3. Review company benefits
Electric company cars and pension contributions remain attractive, but the rules are changing.
4. Consider property implications
If you own high value residential property, factor in the new annual charge from 2028.
5. Strengthen bookkeeping and record keeping
Clear and accurate financial records will help you track how these changes affect you and allow you to plan ahead confidently.
Need Help Navigating the Changes?
The Autumn Budget 2025 introduces a range of tax and financial changes that will impact small businesses, director shareholders and families across the UK.
If you would like a personalised review of how the new rules affect your situation, we are here to help. We can walk you through the numbers, explore tax-efficient alternatives and help you plan for the years ahead.
Get in touch, and we will guide you step by step.
Want to know more?
You can contact Hammond-Barr accountants on 01438 281281 or via email at [email protected].
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