26 November 2025

After months of the government “rolling the pitch” (please don’t mention the Ashes first test!) that their second Budget would be as bad as their first in terms of increasing taxes, the government today finally delivered a whole range of tax increases (although the OBR actually beat them to it by accidentally publishing the details prior to the Budget statement!).

Rather than introducing many new tax raising measures, a far simpler approach would have been to increase income tax by 2%, but after a U-turn on the U-turn, this option has been thrown back into the long grass. Having said this, by extending the freeze in the income tax thresholds for a further three tax years (which is the largest tax raising measure announced today) the Chancellor risks facing criticism that the government’s election manifesto to not raise income tax on working people has been broken (and certainly contradicts what the Chancellor said at last year’s Budget when she dismissed this option).

Whilst income tax rates across the board were not raised, the government have increased income tax rates by 2% in relation to income that arises from dividends, interest and rental property.

Businesses and employees will be very disappointed with today’s announcement on salary sacrifice and pension contributions, which will again result in higher NIC costs (£4.7 billion per year). The only silver lining is that the change will not commence until April 2029, as opposed to being introduced next year.

One welcome announcement on inheritance tax for owner-managed businesses and farmers is that the £1million allowance for Business Property and Agricultural Property Reliefs will now be transferable to a surviving spouse or civil partner (in an identical way to the £325k nil rate and £175k residence nil rate bands) but they will understandably question why it has taken the government a year to make this sensible change. In addition, many of these businesses will have hoped that the £1million allowance would be increased to the rumoured £5million level, but disappointingly, it wasn’t, which will leave many of these businesses with the worry of how to preserve their business for future generations.

They say that “things come in threes” – let’s hope that this is not true with next year’s Budget and yet more significant tax increases!

 The Autumn Budget 2025 announcements cover the following topics:

Please click here to read and download the Autumn Budget 2025 highlights in newsletter format.

If you have any queries on the Autumn Budget 2025 please do not hesitate to contact one of our tax specialists on 01228 530913 or 01768 864466 or by email at hello@doddaccountants.co.uk.