The Big Freeze Continues
The Autumn Budget 2025 confirmed that Income Tax thresholds will now remain frozen until April 2031. This includes the Personal Allowance (£12,570) and the higher-rate threshold (£50,270). Although rates are unchanged, this prolonged freeze will draw millions more people into higher tax
brackets – a phenomenon known as fiscal drag.
Dividend tax rates will rise by 2 percentage points from April 2026, and property income will move to its own set of higher tax rates from 2027. These changes increase the importance of effective tax planning and the use of tax efficient wrappers such as ISAs and pensions.
With more pressure on household finances, forward planning now plays a crucial role in reducing
unnecessary tax leakage.
Compliance: This content is for information only and not advice. Tax rules may change. The value of your investment can fall as well as rise and you may not receive back the full amount invested.
Pension Changes
One of the most significant changes from the Budget is the restriction on salary sacrifice. From April 2029, the amount employees can sacrifice without National Insurance will be capped at £2,000 per year.
While pension contribution limits such as the Annual Allowance and Lump Sum Allowances remain unchanged, many higher earners who rely on salary sacrifice will see a reduction in overall tax efficiency.
Employers may also face higher NI costs and may need to redesign remuneration packages. Employees should reassess their pension strategy early to ensure contributions remain efficient.
Compliance: This content is for information only and not advice. Tax rules may change. The value of your investment can fall as well as rise and you may not receive back the full amount invested.
What the Budget Means for Business Owners
While Corporation Tax rates remain unchanged at 19% and 25%, the Budget introduced several important measures for business owners and entrepreneurs.
Reforms include a new UK Listing Relief (three-year exemption from Stamp Duty Reserve Tax for listed companies), expanded Enterprise Management Incentive (EMI) scheme eligibility, and a commitment to unlock more venture funding through the British Business Bank’s new programmes.
There are also notable changes to investment tax relief schemes, including reduced VCT income tax relief from 2026 and increased limits for Knowledge Intensive Companies.
Business owners should review remuneration structures, dividend planning, and investment relief
opportunities as part of their long-term strategy.
Compliance: This content is for information only and not advice. Tax rules may change. The value of your investment can fall as well as rise and you may not receive back the full amount invested.
The New ISA Landscape
ISA rules will undergo significant changes from 2027, particularly the reduction of the annual Cash ISA limit from £20,000 to £12,000. The overall ISA allowance remains £20,000, meaning investors may shift more into Stocks & Shares ISAs to maximise efficiency.
Savers aged 65+ will still be able to allocate the full £20,000 into cash.
With dividend and savings income tax rates rising over the coming years, ISAs continue to be one of the most effective ways to protect long term investments from tax. A review of ISA allocation may be beneficial ahead of the changes.
Compliance: This content is for information only and not advice. Tax rules may change. The value of your investment can fall as well as rise and you may not receive back the full amount invested.
Inheritance Tax Planning
Inheritance Tax thresholds, including the standard £325,000 Nil Rate Band and the £175,000 Residence Nil Rate Band, will remain frozen until April 2031. This freeze, combined with rising property values, will result in more estates being drawn into the IHT net.
Agricultural and Business Property Relief combined limits will be fixed at £1m until 2031, and future changes to the treatment of unused pension funds may create additional complexity for executors.
Early estate planning, including the use of trusts, gifting, pensions and structured planning, provides the greatest flexibility and may significantly reduce future tax liabilities.
Compliance: This content is for information only and not advice. Tax rules may change. The value of your investment can fall as well as rise and you may not receive back the full amount invested.