November Budget 2025

This year’s budget introduced several measures that will come into effect over the next 5 years. Below is a summary.

Personal Tax

The personal allowance of £12,570 and will remain frozen until April 2031, with the basic rate band remaining at £37,700 and the higher rate threshold at £50,270. 

1. Tax on Property income
   1. If you have over £1,000 in property income, the government is introducing a new property tax from 6 April 2027.
      1. 22% for basic taxpayers
      1. 42% for higher rate taxpayers 
      1. 47% for additional rate taxpayers
   1. Relief for residential finance costs will be calculated at the property basic rate of 22%.
2. Savings income
   1. Income tax on savings income is increasing from 6 April 2027
      1.  22% for basic taxpayers
      1. 42% for higher rate taxpayers 
      1. 47% for additional rate taxpayers
   1. The starting rate for savings and personal saving allowance remains unchanged.
   1. From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000. Savers over 65 will continue to be able to save up to £20,000 in a cash ISA each year.
3. Dividend income
   1. Income tax for dividend income is increasing from 6 April 2026
      1. 10.75% for the ordinary rate
      1. 35.75% for the upper rate
   1. The additional rate of 39.35% will be unchanged.

The dividend allowance will remain unchanged at £500.

Changes to the calculation of income tax

The new order of taxation for the purpose of income tax calculation will be as follows:

• Income which is not property, savings or dividend income; then
• Property income; then
• Savings income; then
• Dividend income

CGT 

There are no changes to the rates for gains on assets and the annual exempt amount remains at £3,000 for 2026-27.

Business Asset disposal relief

The lifetime allowance of £1 million is unchanged but from 6 April 2025 the lower rate of CGT increased from 10% to 14%. It will increase further to 18% from 6 April 2026.

Business and Corporate Tax

1. Capital Allowances – new first year allowance and reduction in the main rate writing down allowances.
   1. This measure reduces the writing down allowances (WDA) on the main pool of plant and machinery from 18% to 14% per year.

This will be effective from 1 April 2026 for companies and 6 April 2026 for sole traders.

• In addition, it introduces a first-year allowance (FYA) of 40% for main rate expenditure. 

The new FYA will be available for expenditure from 1 Jan 2026

• Extension of first-year allowances for zero-emission cars and charging points
  • This measure extends to allowances for one year to April 2027.
• Corporation tax filing penalties
  • Companies who do not file their corporation tax returns on time will incur higher penalty charges. This will be for returns with a filing date on or after 1 April 2026             

	Current rate	New rate
Late return	£100	£200
More than 3 months late	£200	£400
Three successive failures	£500	£1,000

• Changes to salary sacrifice pensions from April 2029
  • The amount that is exempt from National Insurance contributions will be capped at £2,000 a year for employee contributions made via salary sacrifice.
  • Contributions through salary sacrifice, like all pension contributions, will still be exempt from income tax.