Autumn Budget 2025: What It Means for Businesses and Individuals

The Chancellor’s Autumn Budget introduced a series of measures aimed at stabilising the economy and addressing fiscal pressures. While headline tax rates remain unchanged, the detail reveals significant implications for both businesses and individuals. Understanding these changes isn’t just about numbers – it’s about compliance, planning, and protecting your interests. Here’s what you need to know and how our legal expertise can help.

 

Key Changes for Businesses

1. National Minimum & Living Wage Increases

From April 2026, the National Living Wage rises to £12.71 per hour for workers aged 21+, minimum wage for 18- to 20-year-olds will rise to £10.85 per hour, and for 16–17 year-olds / apprentices to £8 per hour

Legal tip: Employers should review contracts and pay structures to ensure compliance and avoid tribunal claims and enforcement by HMRC. Our specialist employment law team can help update contracts and policies. Explore Our Employment Law Services.

 

2. Pension contributions under salary sacrifice

From April 2029, the amount of pension contributions exempt from National Insurance (NI) under salary sacrifice will be capped at £2,000 per employee per year. Any contributions via salary sacrifice above this threshold will become subject to employer and employee NI charges.

Legal tip: HR and payroll teams should reconfigure pension schemes, communicate changes to affected staff, and manage the transition over several years. The pension reforms don’t take effect until April 2029, giving employers time to do this.

 

3. Employment Rights Bill on the Horizon

Expected reforms will strengthen protections around paternity leave, sick pay zero-hours contracts, and unfair dismissal.

Legal tip: Businesses should prepare for new statutory obligations. We offer audits and advice to keep your HR policies compliant. Learn More About Our HR Services

 

4. Business Rates Reform

From April 2026, retail, hospitality, and leisure sectors benefit from permanent lower rates, while properties over £500k face higher charges. This marks a significant shift in how business rates are calculated and applied. While it introduces greater fairness and flexibility, it also adds complexity that businesses must prepare for.

Legal tip: Lease negotiations and valuation disputes may arise. We can assist with commercial property law advice. Learn more about our Commercial Property Services

 

5. Capital Allowances & Investment Incentives

A new 40% First-Year Allowance starts in January 2026, while writing-down allowances reduce to 14% from April 2026.

Legal tip: Structuring investments for tax efficiency is key. Our Business Legal Services Team can guide you through acquisitions and asset planning. Find out more about our Business Legal Services

 

6. Agricultural and Business Property Relief

From April 2026, the full 100% relief applies to the first £1 million of qualifying agricultural or business property. Anything above that gets 50% relief. Unused allowance for the 100% rate can be transferred between spouses or civil partners, so couples can still pass on significant value tax-free alongside other allowances (Nil Rate Band and Residence Nil Rate Band).

Legal tip: With rising land values and complex ownership structures, it remains important to take advice on succession planning sooner rather than later to ensure these reliefs are maximised and the family business is protected. Our Business Legal Services Solicitors and Private Client team can give advice based on your own personal circumstances.

 

Key Changes for Individuals

1. Frozen Income Tax & NI Thresholds until 2031

The government has decided to keep the current tax bands and National Insurance thresholds the same until 2031. That means:

• No increase in personal allowance or higher-rate thresholds for six years.
• As wages and pensions rise with inflation, more of your income will fall into higher tax bands even though the rates haven’t changed. This is called “fiscal drag.”

What does this mean for you?

• If you earn more over time, you’ll pay a bigger share of your income in tax.
• People who were just under the higher-rate threshold may find themselves paying 40% tax sooner than expected.
• It can also affect inheritance planning because more estates will exceed thresholds for tax.

Legal impact: This is where proactive planning matters. We can help you set up trusts to protect family wealth, review your estate plan to minimise inheritance tax and explore tax-efficient strategies for bonuses, dividends, and pensions.

 

2. Dividend & Savings Tax Hikes

The Autumn Budget 2025 announced significant increases in the tax rates on dividends and savings income. From April 2026, dividend tax rates will rise by 2%, and from April 2027, savings and property income tax rates will also increase.

What does this mean for you?

• If you’re a company director taking income as dividends, your tax bill will go up.
• Investors with significant savings or rental income will see higher tax liabilities.

Legal tip: We can help you restructure remuneration packages, explore tax-efficient investment vehicles, and review your estate planning to minimise exposure.

 

3. Property Tax Changes

A new council tax surcharge applies to homes over £2m from April 2028, and property income tax rates rise to 22%, 42%, and 47% from April 2027.

What does this mean for you?

• High-value homeowners will pay more council tax.
• Landlords and property investors will see reduced net returns.

Legal tip: Buy-to-let landlords and high-value homeowners should seek advice on disposals and CGT reliefs – our Business Legal Services Solicitors can help you with this.

 

4. Pension Salary Sacrifice Cap

As mentioned above, from April 2029, NI exemption is limited to the first £2,000. For employees, especially those on higher salaries or making large pension contributions, the change reduces the tax/NIC benefits of salary sacrifice — which may erode the attractiveness of employer-sponsored pension saving.

Legal tip: Affected individuals should seek advice from a professional surrounding restructuring pension arrangements and investments.

 

5. Cap on Trust Charges – What Does It Mean?

From April 2025, a new cap applies to inheritance tax charges on certain trusts (called “excluded property trusts”) that existed before October 2024.

In plain terms:

• Trusts often pay tax every 10 years and when assets enter or leave.
• Previously, some offshore trusts avoided these charges. Now, if the person who set up the trust becomes a long-term UK resident, the trust may face UK tax.
• The new cap limits charges to £5 million per 10-year cycle or £125,000 per quarter before the next anniversary.

Legal tip: Trustees should review whether these trusts still make sense and plan ahead. Our Private Client team can advise on appropriate trusts.

 

6. Infected Blood Compensation Payments

Inheritance tax relief now applies to compensation under the Infected Blood Scheme.

In plain terms:

• If the person who received compensation has died, the first living recipients can pass it on free of inheritance tax.
• They also have two years to gift the money without triggering tax.

Legal tip: Families affected should seek advice to make the most of this relief.

 

7. Anti-Avoidance Measures – Overall Impact

New rules close loopholes that allowed moving assets offshore to avoid UK tax.

In plain terms:

• UK property held through overseas companies will now be treated as UK property for tax purposes.
• Only gifts to UK charities will qualify for tax relief.
  
  

Legal tip: Offshore structures won’t protect UK assets anymore. Review your arrangements to stay compliant.

 

Why Legal Advice Matters

Budget changes often create hidden risks and opportunities. Whether it’s employment compliance, property transactions, or personal wealth planning, proactive legal strategies can save you time, money, and stress.

 

How We Can Help

If you’re unsure how these changes affect you or your business, contact our Business Legal Services and Private Client teams today for tailored advice.