Income Tax Thresholds
Income tax and NIC thresholds were frozen for a further 3 years and will remain at their current levels until April 2031.
The tax-free personal allowance will therefore remain at £12,570 with basic rate tax being triggered above this level. Higher rate tax will kick in at £50,270, and additional rate tax will be levied from £125,140. The tapering of the personal allowance between £100,000 and £125,140 also remains untouched.
Income Tax Rates
The standard 20% basic rate, 40% higher rate and 45% additional rates of tax have not been changed for earned/pension income.
Dividend income, property income and savings income however, have been targeted and, these tax rates will, in main, increase by 2% as detailed below.
The rates of tax charged on dividend income will be increased from April 2026. Basic rate dividend tax will increase by 2% from 8.75% to 10.75% and higher rate dividend tax will also increase by 2% from 33.75% to 35.75%. Bizarrely additional rate dividend tax will remain at 39.35%.
The tax charged on property and savings income will, from April 2027, increase by 2% across the board, therefore creating a 22% basic rate, 42% higher rate and a 47% additional rate.
National Insurance Contributions (NIC)
NIC thresholds and rates remain untouched after last year’s significant increase to employers' national insurance in particular.
The NIC savings that are associated with salary sacrifice on employee pension contributions however, will be capped from April 2029, please see more here.
Please click here to go back to our full Autumn Budget 2025 analysis.
