Autumn Budget 2025: What Accountants Need to Know

On 26 November 2025, Chancellor Rachel Reeves presented her second Budget to Parliament, introducing significant tax changes that will impact accountants and clients across the UK. While the government avoided headline rate increases to income tax, National Insurance, and VAT, the Autumn Budget brings a mix of revenue-raising measures, frozen thresholds, and targeted tax changes that are likely to shape your client conversations in the next few weeks and months. This overview breaks down what you need to know and what those changes mean for the clients you support.

Tax Thresholds Frozen Until 2031

The Government will freeze income tax and employer National Insurance thresholds for an additional three years, locking them in place until 2031.

Who’s affected

Everyone – employees, employers, company directors, sole traders, landlords – essentially anyone earning taxable income.

The impact

Expect ‘stealth tax’ pressure to intensify. As wages rise but thresholds stay static, clients will see more of their income dragged into higher tax brackets without any actual increase in purchasing power.

How accountants can support clients

Review the long-term impact with clients before year-end. Build threshold freezes into tax planning conversations, particularly around salary/dividend splits, PAYE planning, and director compensation. Consider salary sacrifice arrangements where beneficial, and advise on pension contributions to mitigate higher rate tax exposure.

Pension Salary Sacrifice Changes

From April 2029, salary-sacrificed pension contributions above £2,000 per year will become subject to both employer and employee NICs.

Who’s affected

Employees using salary sacrifice for pension contributions and their employers. This will affect higher earners who maximise pension contributions.

The impact

Employers face higher payroll costs; employees see reduced take-home benefit.  The tax efficiency of salary sacrifice diminishes significantly.

How accountants can support clients

Model the new cost implications now, especially for owner-managed companies. Many will need updated remuneration strategies before 2029.

Dividend Tax Rates Increasing from 2026

Dividend tax rates increase by 2% from April 2026. Basic rate rises to 10.75%, and the higher rate to 35.75%.

Who’s affected

Company directors and shareholders who extract profits via dividends – a significant portion of small business owners and contractors.

The impact

The classic small company salary/dividend split becomes less efficient – especially when combined with frozen thresholds.

How accountants can support clients

Reassess salary-dividend splits for director-shareholders. Discuss shifting dividend timing and alternative remuneration methods.

New Property Income Tax Rates

Separate property income tax rates apply from April 2027: 22% basic rate, 42% higher rate, and 47% additional rate – 2% above standard income tax rates.

Who’s affected

Landlords, investors, and high-earning clients with mixed income streams.

The impact

Higher tax costs for property investors, likely feeding through to increased rental prices.

How accountants can support clients

Review property investment structures. Consider incorporation for larger portfolios. Advise on timing of property disposals and potential restructuring options.

Additional Budget Changes

• A “mansion tax” applies to properties worth over £2 million from April 2028, adding an annual surcharge of £2,500 to £7,500 on properties valued over £2 million, which creates higher running costs for high-value homeowners and potential planning opportunities around valuation timing.
• Capital allowances are being restructured with the main writing down allowance dropping from 18% to 14% from April 2026, alongside the introduction of a new 40% first-year allowance from January 2026. Investment timing will be crucial for maximising tax relief.
• The ISA rules are changing from April 2027 – under-65s will face a £12,000 cash ISA limit within the overall £20,000 overall allowance, which shifts the balance toward equity-based saving and alters long-term planning for younger clients.
• Making Tax Digital for Income Tax will begin in April 2026 with no late-submission penalties for quarterly updates in the first year, giving sole traders and landlords a short period of flexibility.

Next Steps

Most changes take effect in future years, but clients will expect early guidance and clear forward planning. ICPA provides the expert support, resources, and guidance you need to serve your clients with confidence.

Download our comprehensive Budget 2025 Summary for a detailed analysis and client-ready explanations of every change.

Request the ICPA Budget Summary 2025: