Jennie Brown, tax partner at Streets, breaks down the Autumn Budget.
The Chancellor’s second Autumn Budget has landed, and while headline income tax rates remain untouched, the devil is in the detail. This is a revenue-raising Budget without the political shock factor, leaning heavily on stealth measures that will reshape tax planning for property owners, investors, and business leaders.
Here are the key changes you need to know, and what they mean for you:
- Property income: A new tax regime
From April 2027, property income will have its own tax rates:
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
Mortgage interest relief continues as a tax credit, but only at the new property basic rate of 22%. Incorporation may look attractive, but tread carefully. HMRC closely reviews incorporations, and from April 2026, CGT Incorporation Relief will no longer apply automatically; you must claim it explicitly. Commercial rationale and compliance are essential.
- Dividend and savings income: Higher taxes ahead
From April 2026, dividend tax rates rise by 2 percentage points:
- Ordinary rate: 10.75%
- Upper rate: 35.75%
(Additional rate remains at 39.35%)
Savings income follows suit from April 2027, with rates increasing to 22%, 42%, and 47%. ISAs remain vital, but note the cash ISA cap drops to £12,000 for under-65s from April 2027, with the balance reserved for Stocks & Shares ISAs.
- Inheritance tax: Spousal transfer of relief
Previously, Business Property Relief (BPR) and Agricultural Property Relief (APR) could give 100% relief on qualifying business or farm assets. From April 2026, these are capped at £1 million combined, but the £1m allowance can now transfer to a surviving spouse. Valuation and eligibility checks are critical, especially for family businesses and farms.
- Pensions and NIC: Salary sacrifice curbed
From April 2029, only the first £2,000 of pension contributions via salary sacrifice will be exempt from NIC; above this, standard NIC applies. This limits flexibility for high-paid employees, though pensions remain a cornerstone of planning.
5. Employee Ownership Trusts (EOTs): CGT relief halved
The generous 100% CGT exemption on qualifying disposals to EOTs ends now. From 26 November 2025, only 50% of the gain is exempt, with the remainder taxed at your applicable CGT rate. If you haven’t completed an EOT transfer already, the old relief is gone. Planning now means working within the new rules or considering alternative succession strategies.
- Fiscal drag: The silent tax rise
Income tax thresholds remain frozen until 2031, pulling more taxpayers into higher bands as wages rise. Combined with asset-based tax hikes (property, dividends, savings, CGT, and IHT relief caps), the overall tax burden is projected to hit 38% of GDP, the highest in 70 years.
What does this mean for you?
- Landlords: Review portfolio profitability and consider restructuring options carefully.
- Business owners: Revisit remuneration strategies, dividends are less attractive.
- High-net-worth individuals: Estate planning is urgent; the £1m BPR/APR cap changes the game.
- Succession planning: If an EOT was part of your exit strategy, note that full relief is no longer available, review options under the new 50% rule or consider alternatives.
- Investors & savers: Maximise ISA allowances before the cap bites; consider tax wrappers for dividend-heavy portfolios.
Our view
This Budget signals a clear shift: taxing wealth and passive income streams rather than earned income. For many, the impact won’t be immediate, but the timeline is short enough to demand proactive planning now.
If you’d like to discuss how these changes affect your property, investments, or business succession plans, get in touch today by emailing info@streets.uk or contacting your local office. The earlier we act, the more options we have.
