The Autumn Budget delivered on 26 November 2025 sets out one of the most significant shifts in personal and asset-based taxation in over a decade. For small businesses, the self-employed, and residential landlords, the changes will have direct and long-lasting effects on income, investment decisions and compliance obligations.
Below is a clear, in-depth breakdown of everything relevant to UWM clients.
Personal Tax Thresholds Frozen Until April 2031
The government has confirmed that the major Income Tax and NIC thresholds will remain fixed for an additional three years, from April 2028 to April 2031:
Personal Allowance: £12,570
- Basic rate band: frozen
- Higher-rate threshold: £50,270
- Additional-rate threshold: £125,140
- NIC Primary Threshold & Lower Profits Limit: £12,570
- NIC Upper Earnings/Profits Limits: £50,270
- Employer NIC Secondary Threshold: £5,000
What this means
Because earnings typically rise over time, keeping thresholds frozen pushes more people into higher tax bands – known as fiscal drag. This Budget prolongs that effect until 2031, increasing tax liabilities for employees, directors, and many self-employed individuals even without any real increase in take-home pay.
Dividend Tax Rates Increasing from April 2026
A major change for owner-managed companies.
From 6 April 2026:
- Ordinary rate: 10.75%
- Upper rate: 35.75%
- Additional rate: 39.35% (unchanged)
Impact
Many small companies rely on a blend of salary and dividends. These increases reduce the tax efficiency of dividend extraction and will affect remuneration planning from 2026-27 onwards.
Savings and Property Income Tax Rates Increasing from April 2027
From 6 April 2027, both savings income and rental property income will be taxed more heavily.
Savings income:
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
Property income:
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
New ordering rule
Personal allowances and reliefs must be applied to earned income first, and only then to savings/dividend/property income.
This means a greater portion of asset-based income will be taxed at higher rates.
Who is affected
- Landlords in their own name
- Partners in residential property partnerships
- Individuals with significant interest income
- Small business owners who invest personally or hold rental property
Capital Allowances Overhaul: WDA Cut to 14% & New 40% First-Year Allowance
The Budget introduces two major changes to plant & machinery allowances.
(1) Main rate Writing Down Allowance cut to 14%
From April 2026, the main rate WDA drops from 18% to 14%.
(2) New 40% First-Year Allowance (FYA)
From 1 January 2026, businesses can claim a 40% upfront deduction on qualifying main-rate assets.
Not eligible:
- Cars
- Second-hand assets
- Assets leased overseas
Who benefits
- Limited companies not eligible for full expensing
- The self-employed and partnerships (via Income Tax capital allowances)
- Companies using leased assets
Overall effect
This reform raises revenue in the long term (confirmed in the Budget scoring), while still offering an incentive for fresh investment.
Pension Salary Sacrifice – NIC Relief Capped at £2,000 from April 2029
From 6 April 2029, the favourable NIC treatment of pension contributions via salary sacrifice will be restricted.
- Only the first £2,000 of contributions per year will qualify for employer and employee NIC exemption.
- Any amount over £2,000 will attract normal NICs.
Impact
- Affects owner-managers who make large pension contributions through salary sacrifice.
- Reduces the tax advantage of large, regular sacrifice arrangements.
- Employers with generous pension schemes will need to adjust costings.
New Mileage-Based Vehicle Tax (“eVED”) from April 2028
The government will introduce Electric Vehicle Excise Duty (eVED), a new mileage-based tax on:
- Electric cars
- Plug-in hybrid cars
Taking effect from April 2028, the rate will be set at around half the equivalent fuel-duty rate.
A typical EV driver is expected to pay around £240 per year.
Impact for businesses
- Mileage tracking will become essential for EV company cars and self-employed mileage claims.
- EV running-cost advantages narrow significantly.
New High Value Council Tax Surcharge from April 2028
From April 2028, a High Value Council Tax Surcharge (HVCTS) applies to:
- Residential properties valued at £2 million or more
- In England
- Charged in addition to standard council tax
Impact
- High-value landlord portfolios will face materially higher annual costs.
- Property partnerships owning high-end residential assets should factor this into budgeting and yield planning.
HMRC Compliance Push: CIS, Investigation Powers and VAT E-Invoicing
The Budget introduces a substantial package aimed at reducing the tax gap, including:
Strengthened Construction Industry Scheme (CIS) rules
- Tighter compliance checks
- Increased enforcement
- Greater scrutiny of supply chains
Expanded use of HMRC powers
- More debt collection capacity
- Stronger enforcement against avoidance schemes
- A strengthened informant-reward scheme
Mandatory e-invoicing for VAT from April 2029
- Businesses will be required to use electronic invoicing
- HMRC expects this to improve reporting accuracy and reduce fraud
Overall yield
HMRC expects the new tax-gap measures to raise an additional £2.4bn per year by 2029–30.
Key message for clients
Expect more checks, more digitalisation, and tighter requirements.
Small businesses — particularly those using CIS or operating partially in cash — should prepare for increased scrutiny.
Summary
Budget 2025 delivers substantial tax increases across dividend income, savings, property, and the future cost of driving. The freeze on thresholds until 2031 and the overhaul of capital allowances will materially affect planning for the next five years.
Small businesses, the self-employed and landlords should begin reviewing:
- How they extract profit
- How they structure rental income
- Whether to accelerate or defer investment
- How salary sacrifice is used
- Compliance processes ahead of VAT e-invoicing and tighter HMRC enforcement
If you’d like a personalised review of how these measures impact you or your business, the UWM team is here to help.
