Budget 2025: For Individuals & Families

26th November 2025

Click here to read the full Whitings 2025 Budget Analysis and Commentary

Budget 2025: What the New Tax Measures Mean for Individuals & Families

The 2025 Autumn Budget brings a wide range of tax changes that will affect many households over the next few years, despite the Labour party manifesto promising “not to increase taxes on working people” (UK Parliament, 2025). Below is an overview of the key personal tax changes and what these could mean for you.

As a follow on from the previous Autumn budget in 2024, one of the biggest announcements (despite being mentioned only very briefly in the budget speech itself) relates to Inheritance Tax (IHT). From April 2026, couples will be able to transfer any unused part of the new £1 million agricultural and business property relief allowance, even if the first spouse passed away before that date. While this won’t fully address the impact of last year’s major reforms for many families, it is nonetheless a positive step.

The IHT nil rate bands (being the nil rate band of £325,000, residence nil-rate band of £175,000, and £1million allowance for 100% rate of agricultural property relief and business property relief) are already set at current levels until April 2030. The budget announced that all IHT thresholds will stay frozen until April 2031, meaning more estates may fall into the tax net as asset values rise.

A similar freeze applies to Income Tax and National Insurance. The Personal Allowance (£12,570) and higher rate threshold (£50,270) will be frozen between 2028 and 2031. National Insurance limits will also remain at their current levels. For graduates, the plan 2 student loan repayment threshold will be fixed at £29,385 for three years from 2027.

If you earn income from property, dividends, or savings, you are likely to feel some of the most significant changes. From 6 April 2027, property income will be taxed at new dedicated rates of 22%, 42% and 47%. Savings income will follow the same pattern from the same date, with basic, higher and additional rates also increasing to 22%, 42% and 47%.

Dividend income changes arrive sooner, taking effect from 6 April 2026. The basic and higher dividend tax rates will each rise by 2%, becoming 10.75% and 35.75% respectively, while the additional rate remains at 39.35%.

The offset of tax reliefs and allowances (including the personal allowance) will be reordered so that your earned income is reduced first, making investment income more exposed to the higher rates of tax.

For pension savers, salary sacrifice will become less generous. From April 2029, employer and employee NICs will apply to pension contributions over £2,000 made through salary sacrifice arrangements.

Other changes include reduced Capital Gains Tax relief on transfers to Employee Ownership Trusts, updates to ISA rules (including the introduction of a £12,000 cash ISA cap from 2027), and the arrival of a new Electric Vehicle Excise Duty from 2028, which will apply as a pence per mile charge for electric and hybrid vehicles.

In addition, a so-called “mansion tax” will be introduced in the form of the High Value Council Tax Surcharge. This new charge will apply to owners of residential property in England valued at £2 million or more, starting in 2028/29.