On 26 November 2025, Chancellor Rachel Reeves delivered her Autumn Budget. Below, we explore some of the key changes and their impacts on individuals and businesses.

Property

The ‘Mansion Tax’

Residential properties worth more than £2 million will be subject to a ‘High Value Council Tax Surcharge’ in addition to existing council tax from April 2028.

The rates are staggered as follows:

Property Value Additional Charge
£2m to £2.5m £2,500 annually
£2.5m to £3.5m £3,500 annually
£3.5m to £5m £5,000 annually
£5m plus £7,500 annually

Tax increases for Property Income

“Property income” is any income produced from the letting of land and buildings to a tenant. This income will be taxed an additional 2% for each rate band starting in April 2027.

The new rates are as follows:

  • The new property basic rate: 22%;
  • The new property higher rate: 42%;
  • The new property additional rate: 47%;

Business rates

With the intention of providing relief to smaller high street operators business rates will be reduced for the hospitality and leisure sectors – those with properties valued up to £750,000 will see a decrease in rates from April 2026.

In contrast, a larger contribution will be required from large scale logistics operators and rates will therefore be increased for higher-value commercial sites for example, large warehouses used by online retailers and logistic providers – those with a value of more than £500,000 will see an increase in rates from April 2026.

Stamp Duty Land Tax

Whilst there was speculation of a complete overhaul of the stamp duty land tax system, there was no change in this budget from a property perspective.

Energy Bills for residential properties

Funding for green energy schemes will no longer be taken from household energy bills. This means that the average household using Dual Fuel should expect to see, on average, a reduction of  around £150 from their energy bills from April 2026.

Individual

Non-savings, Savings and Dividend Tax

The Income Tax threshold freeze has been extended until April 2031. National Insurance will also remain the same.

Tax on dividend income will increase by 2 percentage points. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75% from April 2026. The additional rate will remain unchanged at 39.35%.

Tax on savings income will increase by 2 percentage points across all bands. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027.

Nil Rate Band & Residence Nil Rate Band

The inheritance tax (IHT) residence nil-rate band (RNRB) and nil-rate band (NRB) will be frozen until April 2031.  These thresholds were previously frozen until April 2030, giving them a one-year extension.

The RNRB has been fixed at £175,000 since April 2020.The NRB has remained at £325,000 since April 2009, meaning that by the end of the fixed term there will have been no increase for at least 22 years.

With the rise in property values and inflation, it is highly likely that many more estates will have to pay IHT over the coming years with the nil-rate bands being fixed until 2031.

Agricultural Property Relief (APR) & Business Relief (BR)

The 2024 Budget announced that there will be a combined £1 million relief allowance for APR and BR. At the time the cap was announced there was no provision for unused relief to pass to the surviving spouse or civil partner.

As announced in the Autumn 2025 budget, any unused relief can now be transferred to the surviving spouse or civil partner and can be used against their estates.

From 6 April 2026, the transferable allowance will come into effect but will apply even if the first death occurs before this date.

Overseas Charity Exemptions

Gifts to overseas charities will no longer qualify for IHT exemption. This will not apply to overseas charities that have UK status.

This also applies to charitable trusts that are not UK registered.

For lifetime gifts, this will take effect immediately. For charitable legacies in Wills, this will take effect from 6 April 2026.

If you are leaving gifts to any overseas charities in your estate, it may be necessary to review your Will to check whether these gifts will remain exempt from IHT.

Pension Contributions

As previously announced in the Autumn Budget 2024, unused pension funds will, as of April 2027, fall within the scope of IHT calculations. In the recent Budget, it has been announced that pensions will now take a further hit.

From April 2029, any pension contributions above £2,000 per annum which are made by way of salary sacrifice will be subject to National Insurance contributions. Given this double blow, individuals utilising pensions as a means of estate planning may now wish to re-evaluate their strategies.

Businesses

Employee Ownership Trusts

The current Capital Gains Tax (CGT) relief available on qualifying disposals to Employee Ownership Trusts (EOTs) allows business owners to sell their shares without paying any CGT. The relief available on these disposals will be reduced from 100% of the gain to 50%.

The cost of the CGT relief alone reached £600 million in 2021-22 and forecasts suggest it could have risen to more than 20 times the original costing to £2 billion by 2028-29 without intervention.

Writing Down Allowances

‘Writing down allowances’ are one type of capital allowance. They let you deduct a percentage of the value of certain items from your profits each year.

The measure reduces the rate of writing down allowance (WDA) on the main pool of plant and machinery from 18% to 14% per year which still enables full relief for the expenditure.

In addition, it introduces a first-year allowance (FYA) of 40% for main rate expenditure, with reduced restrictions compared to other FYAs, to encourage investment where those FYAs are not available, such as for assets bought for leasing and by unincorporated businesses.

EMI Options

EMI option schemes are designed to help trading companies provide their people with significant tax benefits compared to other share arrangements. EMI schemes help companies with growth potential to recruit and retain employees. Certain requirements must be met in order to receive the benefit of the tax relief.

From April 2026, the following limits will be increased:

  • Company size: The eligibility criteria will be expanded to include companies with up to 500 employees (previously 250) and gross assets of up to £120 million (previously £30 million).
  • Company share option limit: The total value of EMI options a company can grant, calculated on the date the options are granted, will double to £6 million.
  • Option life: The maximum period an EMI option can be held before it must be exercised will be extended from 10 years to 15 years, which will also apply to existing unexercised EMI options.

From April 2027, in a move to simplify administration:

  • Notification requirement: The requirement to HMRC of an EMI option grant within 92 days will be removed entirely.

Got any questions?

Our expert teams are here to help with any questions you might have about how the budget could affect you, your family or your business. Get in touch with us to ensure that your estate and business planning is working towards your goals.

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