What the November 2025 Budget Means for Businesses and Individuals
The UK Autumn Budget released on 26 November 2025 introduces major adjustments to the tax system, wages, pensions, and investment landscape. While headline tax rates remain unchanged, the Budget raises substantial revenue through freezes, caps, and targeted increases that will affect businesses and individuals over the coming years.
This comprehensive summary outlines all the major and minor changes, explains them clearly, includes the specific numeric adjustments, and sets out what they may mean in practice.
Key Budget Numbers
£26.1 billion additional annual revenue projected by 2029/30
£7.6–£8 billion per year raised from tax threshold freezes alone
2% increase on dividend, savings and rental-income tax rates
£5,000 cut to the annual Cash ISA allowance
£2,000 cap on NIC-saving pension salary sacrifice
4.1% rise in National Living Wage for adults
New property surcharge applying to homes valued above £2 million
Business Impacts - Headlines
1. Income Tax & NIC Threshold Freeze (until 2030/31)
The change:
Income tax and National Insurance thresholds—including the £12,570 personal allowance and £50,270 higher-rate threshold—will remain frozen until April 2031, meaning they will not increase with inflation or wage growth.
Numbers:
Personal allowance: £12,570
Higher-rate threshold: £50,270
What this means:
As wages rise, more income becomes taxable, increasing employer wage pressures and reducing employees’ take-home pay.
2. Pension Salary-Sacrifice NIC Relief Cap (£2,000)
The change:
From 2029/30, only the first £2,000 of salary sacrificed into a pension will qualify for National Insurance savings, with any amount above taxed as normal earnings.
Numbers:
NIC-efficient salary sacrifice limited to £2,000 annually
What this means:
Businesses lose a key tool for lowering NIC bills, making pension packages less cost-effective and requiring review of reward structures.
3. +2 Percentage Point Increase on Dividend, Savings & Rental Income Taxes
The change:
All taxes on dividends, savings interest and rental/ property income will rise by 2 percentage points, immediately raising the tax burden on non-salary income.
Numbers:
Basic-rate dividend tax: 8.75% → 10.75%
Higher rate: 33.75% → 35.75%
Additional rate: 39.35% → 41.35%
What this means:
Owner-directors and investment-focused businesses will see reduced net returns, making profit extraction and investment strategies less tax-efficient.
4. High-Value Property Surcharge for Properties Over £2 Million (from 2028)
The change:
A new annual surcharge will apply to residential properties valued above £2 million starting in April 2028, increasing the cost of holding high-value real estate.
Numbers:
Applies to properties worth £2,000,000+
What this means:
Companies or directors owning high-value premises will face higher annual tax liabilities, prompting review of property ownership structures.
5. National Living Wage Increase (April 2026)
The change:
The National Living Wage will rise significantly across age bands, with the wage for workers aged 21 and over increasing by 4.1%, and younger workers seeing larger percentage increases.
Numbers:
Age 21+: £12.21 → £12.71 (4.1% increase)
Age 18–20: £10.18 → £10.85 (6.6% increase)
Ages 16–17/apprentices: £6.40 → £8.00 (25% increase)
What this means:
Businesses employing lower-paid workers will experience substantial wage bill increases, affecting staffing levels, pricing strategies and margins.
Business Impacts — Additional
1. Business Rates Adjustments
The change:
The government has confirmed revised business rate reliefs for retail, hospitality and leisure sectors while increasing charges on large online retail warehouses and logistics hubs.
Numbers:
Relief extended for high-street sectors
Higher multipliers for large distribution sites (exact % varies by region)
What this means:
High-street businesses benefit from stability, while online-heavy businesses see increased operating costs.
2. Electric Vehicle Road Charge (from 2028)
The change:
A new mileage-based tax will apply to electric vehicles starting in 2028 to replace lost fuel-duty revenue as EV adoption increases.
Numbers:
Begins 2028 (final charge rate pending)
What this means:
Businesses with EV fleets will face higher running costs, requiring adjustment to fleet budgets and travel policies.
3. Increased Compliance Burden
The change:
Multiple reforms—including the pension NIC cap, higher dividend taxes, and new property surcharges—introduce additional reporting and administrative obligations across payroll and accounting workflows.
Numbers:
Affects payroll, pensions and property reporting (no single monetary figure)
What this means:
Businesses must allocate more time or resources to compliance, increasing administrative costs.
4. Cashflow Squeeze from Multiple Measures
The change:
Higher wages, higher dividend tax, property surcharges and frozen thresholds combine to increase outgoing costs for many businesses over time.
Numbers:
Combined effect of multiple increases (varies by business size)
What this means:
Businesses will need detailed cashflow forecasting to maintain financial stability over the next five years.
Individual Impacts - Headlines
1. Threshold Freeze (Stealth Tax)
The change:
Freezing all income tax thresholds until April 2031 means wages will rise while tax bands do not, gradually pulling more income into taxation without changing official tax rates.
Numbers:
Thresholds frozen at £12,570 and £50,270
What this means:
Most individuals will pay more tax over time even with modest pay rises, especially middle-income earners.
2. Pension Salary-Sacrifice NIC Cap (£2,000)
The change:
The NIC benefit of pension salary-sacrifice arrangements will apply only to the first £2,000 of sacrificed salary from 2029/30, reducing the traditional advantage of this savings method.
Numbers:
£2,000 cap on NIC relief
What this means:
Higher earners will lose a major tax-efficient saving tool, decreasing pension growth and increasing personal tax bills.
3. +2 Percentage Point Tax Rise on Savings, Dividends & Rental Income
The change:
A blanket 2% increase on taxes applied to dividends, savings interest and rental income means individuals earning from investments will pay significantly more tax.
Numbers:
Dividend rates: +2% across all bands
What this means:
Landlords, investors and retirees relying on investment income will see reduced net returns.
4. Cash ISA Allowance Cut (£20,000 → £12,000)
The change:
The annual Cash ISA allowance has been lowered by £8,000, restricting the amount individuals can put away tax-free each year.
Numbers:
Allowance reduced by 40%
What this means:
More savings must now be held outside ISAs and will be subject to tax, making long-term savings less tax-efficient.
5. EV Mileage Charge (from 2028)
The change:
A mileage-based tax will apply to electric vehicles starting in 2028, reducing the advantage EV drivers historically enjoyed due to exempt fuel duty.
Numbers:
Implemented 2028
What this means:
Electric vehicle owners—especially high-mileage commuters—will face increasing running costs.
Individual Impacts — Additional
1. Reduced Benefit of Investment-Based Income
The change:
As taxes on dividends and savings rise and ISA allowances fall, individuals earning investment income will see a meaningful reduction in after-tax returns on their assets.
Numbers:
+2% tax rate increase
What this means:
Investment strategies may need rebalancing towards tax-efficient wrappers or diversified options.
2. Increased Living Costs from EV and Property Measures
The change:
The combination of EV charges, higher property taxes, and increased investment taxation may indirectly raise cost-of-living expenses over the next several years.
Numbers:
EV charge begins 2028 (rate TBD)
What this means:
Individuals may need to budget more for transport, housing and investment-related taxes.
3. More Complex Retirement Planning
The change:
With the pension salary-sacrifice cap and higher tax rates, traditional retirement savings strategies become less efficient, requiring more detailed planning.
Numbers:
Salary-sacrifice cap: £2,000
What this means:
Individuals must reassess contribution levels, employer schemes and long-term pension projections.
4. Higher Value of Tax-Free Wrappers
The change:
Given rising taxes on investment income, tax-free vehicles like pensions and ISAs (within their limits) become significantly more valuable for long-term saving.
Numbers:
ISA allowance down £8,000
What this means:
Individuals must be more intentional with annual ISA/pension allowances to minimise tax.
5. Greater Importance of Estate & Wealth Planning
The change:
Higher taxes on property and investments increase the need for structured estate planning, including gifting strategies, trusts and inheritance planning.
Numbers:
Property surcharge on £2m+ properties (from 2028)
What this means:
Those with significant assets must plan earlier to reduce lifetime tax exposure.
How Arctic Accounting Limited Can Help
We help clients navigate all Budget changes through:
Salary and dividend optimisation
Pension and tax-efficient savings planning
Rental income and property tax structuring
Cashflow forecasting under new tax and wage rules
Business planning and strategic advisory
Full scenario modelling for business owners and individuals
Whether you are a business owner, landlord, employee or investor, we can ensure you stay compliant and financially efficient under the new rules.
Sources Used
HM Treasury – Autumn Budget Documents 2025
Office for Budget Responsibility – Economic and Fiscal Outlook (Nov 2025)
UK Government Budget Press Releases
Reuters Budget Coverage
Financial Times Budget Analysis
The Guardian Budget Summary
MoneySavingExpert and MoneyWeek Budget Commentary
UK National Living Wage Announcements
Industry commentary (business rates, pensions, investments, landlord impacts)
