Autumn Budget 2025: What the Key Changes Mean for You & Your Finances 💬📊
- Kieran Thwaites
- 1 day ago
- 5 min read
Updated: 24 hours ago
The Chancellor delivered the Autumn Budget today against a backdrop of stubborn inflation, rising borrowing costs, and pressure on public finances.
While the headlines focus on raising revenue, the real question for our clients is simple: how will these changes affect your take-home pay, your business, and your future tax planning?
Below, we break down the key measures that matter most to individuals, landlords, and small-business owners - along with practical steps you may want to consider.
Table of Contents:
Income Tax & NI Thresholds Frozen 🧊💼
The Government has again frozen the main Income Tax and National Insurance thresholds rather than increasing them in line with inflation - a freeze that has been in place since 2021, and now slated to continue until 2031 at the earliest.
This change explained:
📈 As wages rise over time, more of your earnings may fall into higher tax bands.
💸 Even if the nominal tax rates haven’t changed, your overall tax bill may still increase - a phenomenon known as “fiscal drag”.
🛒 Higher inflation periods make this effect more noticeable, e.g. £1 today is worth less than £1 a year ago due to the inflationary pressure on the cost of living.
Who is affected:
👩💼 Employees receiving annual pay rises
🧾 Directors who pay themselves a salary
⚖️ Anyone near the higher-rate or additional-rate thresholds
Our recommendation:
If you’re on the edge of a tax band, it may be worth reviewing your income strategy, for example, increasing your pension contributions (but more to come on that later!) or initiatives such as elective vehicle salary sacrifice schemes. If you are a company director, you could also look at altering the makeup of your salary and dividends to help reduce your tax burden if skirting close to a higher band.
Higher Taxes on Savings, Dividends & Rental Income 📈💷
Marking a continued shift towards taxing wealth and passive income more heavily, the Budget confirmed a two percentage point increase in tax on unearned income, which includes:
💰 Savings interest
🏘️ Rental profits
📊 General investment income
The rate changes for the above items have increased as follows:
22% for Basic Rate (from 20%)
42% for Higher Rate (from 40%)
47% for Additional Rate (from 45%)
Dividend income
The rate changes for dividend income are as follows:
10.75% for Basic Rate (increased from 8.75%)
35.75% for Higher Rate (increased from 33.75%)
39.35% for Additional Rate (remaining unchanged)
This changed explained:
📉 Landlords and investors will see a direct reduction in post-tax returns.
🏢 Small business owners who rely on dividends may face higher personal tax liabilities.
💰 Those with substantial savings interest (common with rising interest rates) may find themselves paying tax where they previously did not.
Who is affected:
🏠 Property investors and landlords
📈 Individuals relying on dividends
💳 High-interest savers
👔 Company directors taking dividend-heavy remuneration
Our recommendation:
Early tax planning can help mitigate the impact - especially around dividend timing, allowances, and efficient structuring.
Pension Changes: Cap on Salary Sacrifice Contributions 🏦✂️
One of the most significant announcements was the introduction of a cap on pension contributions made through salary sacrifice arrangements from April 2029.
Salary sacrifice has been a powerful planning tool, especially for higher earners. Restricting it reduces the ability to use pensions to lower taxable income and National Insurance.
Practical implications:
🧮 Those making large monthly contributions may exceed the new cap without realising.
👨💼 Owner-directors may need to rethink how they structure retirement contributions through their company.
🔁 It may affect how attractive pension planning is as a tax-saving strategy in the long term.
Our recommendation:
If you use salary sacrifice or operate your own limited company, we strongly advise a review of your pension arrangements in readiness for the new limits coming into force in 2029.
Cash ISA Allowance Cut 💳📉
The Budget included a reduction in the Cash ISA allowance, reducing the amount individuals can shelter tax-free each year from £20,000 to £12,000, starting from April 2027.
Why it matters:
🏦 You can now only place up to £12,000 of your annual ISA allowance into a Cash ISA. The remaining part of your £20,000 total allowance must go into a Stocks & Shares ISA.
🔄 You don’t have to use the full £12,000 for cash - any split is allowed (for example, £5,000 cash and £15,000 stocks & shares) as long as the Cash ISA portion does not exceed £12,000.
🚀 If you prefer the potential for higher, longer-term returns, you can still invest the full £20,000 into a Stocks & Shares ISA.
💡 Savers who routinely max out their ISAs will need to reassess where their additional savings should go.
Who is affected:
💷 High-interest savers
👵 Individuals nearing retirement
📘 Anyone using ISAs for long-term tax efficiency
Our recommendation:
Review your savings strategy in line with the upcoming changes in 2027 to ensure you are maximising the available tax-free limits available to you. If you have previously only used a Cash ISA, it may be prudent to begin to explore Stocks & Shares ISAs to understand their potential and how they could play a part in your long-term investment strategy.
What This Means for Landlords & Property Investors 🏠📉
The combined effect of frozen thresholds and higher taxes on rental income will reduce net yields for many landlords.
Why it matters:
📉 Increasing mortgage rates have already squeezed margins; higher tax pushes profitability down further.
⚖️ Landlords with mixed personal income (salary + rent + dividends) may see interactions between thresholds that they haven’t experienced before.
🗓️ Long-term property planning, including the timing of improvements or disposals, may now require a closer look.
Our recommendation:
If you’re a landlord, we can model the after-tax impact for your portfolio to help you decide on your optimal actions.
Small Businesses & Owner-Managed Companies 🧾🏢
While there were no headline changes to Corporation Tax, the Budget materially affects small business owners through personal taxation.
Why it matters:
💼 Whether the classic “small salary + dividends” strategy remains optimal
💸 The impact of higher dividend taxation on cash extraction
👥 Staff costs, with minimum wage increases raising payroll pressure
🛠️ Reduction in Written Down Allowance (WDA) for limited companies from 18% to 14% from April 2026
🧮 The restrictions on pension salary sacrifice for directors and employees
💧 Possible cashflow impacts over the next 12–24 months as the new rules bed in
Our recommendation:
For companies with small teams, marginal changes to payroll or contributions could have a noticeable effect on profitability.
What You Should Do Now: Practical Next Steps… ✔️📅
For individuals:
Review your income position given the freeze in thresholds
Check whether savings or dividend income may now create a tax liability
Revisit your ISA strategy, given the lower limit
Review pension contributions if using salary sacrifice
For landlords:
Recalculate net yields after tax changes
Review mortgage, expense and repair timing
Consider whether the entity structure remains efficient
For small business owners:
Re-evaluate salary vs dividend strategy
Assess pension strategy under the new caps
Review payroll in light of minimum wage increases
Update 12–24 month cashflow forecasts
How ASBA Accounting Can Help 🤝📞
Tax planning is becoming more complex as thresholds freeze and taxes on income and wealth rise. The right structure - for your salary, dividends, pension contributions, rental income or investment strategy - can make a substantial difference to your net position.
If you’d like a personalised review or would like us to model the impact of the new Budget on your income or business, feel free to get in touch via our contact form or give us a call on 01293 525656. We’re always happy to help.
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