Budget 2025 – A Bite-Sized Summary

What stays the same

• The personal income-tax thresholds (Personal Allowance, higher-rate threshold, additional-rate threshold) are being frozen (i.e. not increased) from 2028 until 2031.
• The government is not raising the headline rates of income tax or National Insurance.

Taxes on income from assets & savings

To make income from assets (rather than from work) pay more “fairly,” there are several tax increases:

• Property-income tax — from April 2027: new rates for “property income” will be introduced: 22% (basic), 42% (higher), 47% (additional).
• Dividend tax — from April 2026: the ordinary rate and the higher rate for dividend income will be increased by 2 percentage points. The additional (top) dividend rate stays the same.
• Savings income tax — from April 2027: the tax rate on savings (interest, etc.) will increase by 2 percentage points across all bands.

In other words, for people who get income from savings, property or dividends, their effective tax rates will go up, while many people with only employment income won’t be affected.

Property wealth & high-value homes

• The Budget introduces a new High-Value Council Tax Surcharge (HVCTS) on residential properties in England worth £2 million or more, starting in April 2028.
• The surcharge will be in addition to the regular Council Tax, and affects property owners rather than occupiers.

Tax reliefs & pension / wealth-relief reforms — targeting high earners/wealth

Several of the changes are aimed at reducing tax advantages that tend to benefit wealthier individuals:

• The government is capping the National Insurance relief on “salary sacrifice” pension contributions at £2,000 of contributions per person per year from 2029. This reduces one of the ways higher earners reduce their tax/NI liability via pensions.
• The relief for “Employee Ownership Trusts” (a kind of capital-gains relief) is being reduced: instead of 100% relief, new disposals will get only 50%.
• For tax-planning via pensions: from April 2027, unspent pension pots will be brought into the scope of Inheritance Tax (IHT) — limiting the use of pensions as a tax-free way to pass on wealth.

Motoring, consumption, and other duty changes

• The Budget introduces a plan to tax electric cars with a self-reported per-mile levy (i.e., a “road use” tax even for EVs) — recognising that all cars contribute to road wear.
• Vehicle Excise Duty (VED) (for cars, vans, motorcycles, heavy goods vehicles) will be uprated in line with RPI (inflation) from April 2026.
• The “Expensive Car Supplement” threshold for zero-emission vehicles is being increased to £50,000 (so applies only to more expensive EVs) — a tweak to how company car taxation treats plug-in hybrids/EVs.
• For gambling: Online (“remote”) gambling duties are being increased significantly: Remote Gaming Duty will rise from 21% → 40% (from April 2026).
• Meanwhile, Bingo Duty will be abolished from April 2026.

Business / Corporate & Capital-investment measures

To support investment and business growth — while also raising revenue elsewhere — the Budget adjusts capital allowances and other corporate-related tax rules:

• From 1 January 2026, a new First-Year Allowance (FYA) of 40% for “main-rate” assets is introduced (for many business investments), to incentivise capital investment.
• At the same time (from April 2026 for Corporation Tax and April 2027 for Income Tax), the regular “writing-down allowance” rate for main-rate assets will be reduced from 18% to 14%.

These ensure that while some reliefs are trimmed, incentives remain for new investment in business assets.

Other changes (administration, anti-avoidance, etc.)

• The government is strengthening efforts to close tax avoidance and evasion: expanding the powers of the tax authority (HM Revenue & Customs, HMRC), increasing enforcement, offering larger rewards for informants in major tax-fraud cases, and targeting promoters of marketed tax avoidance.
• It will also reform the tax treatment of “image rights” — clarifying that any image-rights payments related to employment count as taxable income (subject to income tax and National Insurance).
• Changes to share-transaction taxes: the government will modernise the regime for stamp taxes on share transfers (moving to a digital system, eventually replacing the current stamp duty/stamp duty reserve tax framework).

Source: Gov.UK

Change	Who / what it affects	When it starts/becomes effective
New separate tax rates for “property income” (i.e. rent, returns from letting, etc.) — 22% (basic), 42% (higher), 47% (additional)	People with rental income or other property-derived income	From 6 April 2027
Increase in tax rates on dividend income — +2 percentage points for ordinary (basic) and upper (higher) rates; additional (top) rate unchanged	Investors receiving dividends (shares, investments)	From 6 April 2026 (i.e. from the 2026/27 tax year)
Increase in tax rates on savings income (interest, etc.) — +2 percentage points on basic, higher, and additional rate bands	People earning interest or other savings income	From 6 April 2027 (2027/28 tax year)
Freeze of personal income-tax thresholds (Personal Allowance, higher-rate, additional-rate thresholds) and equivalent NIC thresholds — i.e. no inflation-linked increases for several years	All income-tax and National Insurance payers whose thresholds are tied to income bands	From April 2028 to April 2031
Cap on “salary-sacrifice” pension contributions eligible for NIC relief — maximum £2,000 per person per year	Those using salary sacrifice to contribute to pensions (especially higher earners)	From 6 April 2029
Bringing unspent pension pots into scope for Inheritance Tax (IHT) — limiting use of pensions as a tax-free wealth-transfer route	People with large, unspent pension pots (estate planning via pensions)	From 6 April 2027
Abolish some generous tax reliefs on Business & Agricultural Property Relief / Business Asset Disposal Relief / Investors’ Relief for some disposals (reform of property reliefs, carried interest regime, etc.)	Business owners, farmers, and people using reliefs for the inheritance/sale of business/assets	From 6 April 2026, for some reliefs, related changes to the carried interest tax regime will also from April 2026.
New “High Value Council Tax Surcharge” (HVCTS) — additional annual charge on owners of residential properties in England worth over £2 million, in addition to normal Council Tax	Owners of high-value residential property (in England)	From 1 April 2028 (i.e. 2028/29 fiscal year)
Changes to business capital-investment allowances: introduction of a 40% “First Year Allowance (FYA)” for qualifying business assets; reduction of standard “writing-down allowance” from 18% → 14%	Businesses investing in assets (machinery, equipment, etc.)	FYA from 1 January 2026; writing-down allowance from 1 April 2026
Changes to gambling duties: e.g. increase of Remote Gaming Duty, new Remote Betting Rate, abolishing Bingo Duty	Operators and private individuals participating in online gambling/betting	Some from April 2026, some from April 2027, depending on the duty.