Budget 2025: Key Points & Key Figures

🔹 Income Tax & Thresholds

• Tax thresholds frozen until 2030/31
– Personal allowance and higher-rate band stay fixed.
– Raises £7-8bn a year through “fiscal drag.”
– More people pushed into the 40% band and the 60% taper above £100k.

🔹 Dividend Tax

• Dividend tax rising by 2 percentage points from April 2026
– Basic rate: 10.75%
– Higher rate: 35.75%
– Additional rate: 40.35%
Impact: Around £200 extra tax per £10k dividends.

🔹 Salary Sacrifice Pension Contributions Cap

• Hard cap of £2,000 per year from April 2029
This will hit high earners who sacrifice salary for pension contributions.

This does not affect solo director Limited Company directors making employer pension contributions.

🔹 EV Road Charge (New Tax)

• Starts April 2028
– Pure EVs: 3p per mile
– Hybrids: 1.5p per mile
Annual example:
– 10,000 miles → £300 (EV)
– 20,000 miles → £600

🔹 Tax changes for landlords

• Rising from April 2027
– Property income: basic rate + 2% = 22%
– Property income: higher rate + 2% = 42%
– Property income: additional rate + 2% = 47%

Finance costs, such as mortgage interest, will be relieved at 22% as a tax credit. The existing £1,000 property allowance and the rent a room relief will remain. Again, the government estimates that 90% of UK taxpayers do not have taxable property income.

Landlords face higher ongoing tax costs.

🔹 Tax on savings income

• Rising from April 2027
– Interest and other savings: basic rate + 2% = 22%
– Interest and other savings: higher rate + 2% = 42%
– Interest and other savings: additional rate + 2% = 47%

As the existing saving and dividend allowances will remain, with ISAs in use as well, it is expected that 90% of UK taxpayers will not have taxable savings or dividend income and will be unaffected by the changes. For the 10% who are affected, the impact could be significant, depending on the levels of such income.

🔹 Cash ISA limit to be reduced to £12,000 from April 2027

An ISA is simply a savings account where you never pay tax on the interest you earn. Currently, you are able to contribute up to £20,000 each tax year into a cash ISA (or you can split this allowance between other types of ISA).

However, the Chancellor has confirmed the cash ISA limit will be reduced to £12,000 a year from April 2027. The Government hopes the change – the first cut to the cash ISA allowance since 2017 – will encourage more people to invest in stocks and shares instead.

Here are the key need-to-knows from April 2027:

• Aged 65 or older? There will be no change. The £20,000 cash ISA contribution limit will CONTINUE to apply.

• Aged 64 or under? Your cash ISA limit will fall to £12,000. This will only apply to new contributions you make from April 2027. It won't have any impact on savings you've already contributed to a cash ISA up until this point.

• There's NO change to the annual contribution limit to stock and shares ISAs. This will remain at £20,000.

• The OVERALL annual ISA contribution limit will remain at £20,000, regardless of age. So you'll continue to be able to contribute £20,000 across different ISAs in one tax year.

🔹 Capital Gains Tax

• Expected from April 2026
– Property CGT higher rate: 24% → 28%
– BADR lifetime limit halved: £1m → £500k
Example: £100k gain on rental → £4,000 more tax.

🔹 Two-Child Cap Abolished

• Starts April 2026
Worth around £3,235 per extra child, per year.
One of the few household-friendly measures.

🔹 Gambling Taxes

• Remote gaming duty rising from 21% → 40% in April 2026
Expected to raise £1.1bn per year.
Likely impacts prices, odds and promotions.

🔹 State Pension (“Triple Lock”)

• Rise of approx. 4.8% expected in April 2026
But with frozen tax thresholds, more pensioners will be pulled into paying income tax.

🔹 Corporation Tax

• Main rate stays at 25%
• Early-stage proposal for 40% relief on start-up costs (not yet legislated).
• Compliance pressure increasing (R&D, VAT, IR35, director loans).

A separate small profits rate (SPR) of 19% applies to companies with profits of £50,000 or less. If profits are between £50,000 and £250,000 there will be a marginal rate - https://www.gov.uk/guidance/corporation-tax-marginal-relief.

🔹 Capital Allowances (Low Impact for Small Firms)

• AIA falls from £1m → £250k in 2026
Mainly affects larger investors; most small businesses are unaffected.

🔹 Council Tax Surcharge (Likely)

Expected from 2026 on higher-value homes and second homes.
Indicative impact:
– £150–£350 extra for Band D–F
– £500+ for Band G+

Bottom Line (Short & Honest)

This Budget is a slow squeeze: tax rises on dividends, income, property, EV use and gambling, plus tighter thresholds.

There are some wins (two-child cap scrapped, possible start-up relief), but overall it’s a tax-heavy package.

Not disastrous but definitely not a giveaway.
A steady tightening rather than a single big hit.