Today the Chancellor presented a Budget 2025 with no significant ground for concerns.
Here is a summary of the main points.
MAIN TOPICS
- High Value Council Tax Surcharge (“MANSION TAX”):
From April 2028, owners of properties identified as being valued at over £2 million will be liable for a recurring annual charge which will be additional to existing Council Tax liability. This measure is estimated to raise £0.4 billion in 2029-30. Local authorities will collect this revenue on behalf of central Government.
The Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million and therefore in scope. Revaluations will be conducted every five years.
High Value Council Tax Surcharge charging structure:
Threshold (£m) Rate (£)
£2.0-2.5 £2,500
£2.5-3.5 £3,500
£3.5-5.0 £5,000
£5.0+ £7,500
- Landlord (Individual) Property Income (+2% tax):
From 6 April 2027 separate tax rates for property income will be introduced at 22% for the property basic rate, 42% for the property higher rate and 47% for the property additional rate.
- Dividend Income (+2% tax):
From 6 April 2026 the ordinary rate will be increased by 2% to 10.75% and the upper rate will be increased to 35.75%. The additional rate will remain unchanged at 39.35%.
- Savings Income (+2% tax):
From 6 April 2027 the savings basic rate will be increased by 2% to 22%, the savings higher rate will be increased to 42% and the savings additional rate will be increased to 47%.
- National Insurance Contributions:
From 6 April 2029 the salary sacrificed pension contributions that can receive employee and employer NICs Relief will be limited to £2,000 per year.
- Image rights payments:
From 6 April 2027 the Government will legislate to clarify the tax treatment of image rights to ensure that all image rights payments related to an employment are treated as taxable employment income and subject to income tax, and employer and employee National Insurance contributions.
- Employee Ownership Trusts:
From 26 November 2025 the Government will reduce the Capital Gains Tax relief available on qualifying disposals to Employee Ownership Trusts from 100% of the gain to 50%. This will be legislated for in Finance Bill 2025-26 and take effect.
- Inheritance Tax Non-Domiciled Trusts:
From 6 April 2025 cap inheritance tax trust charges at £5 million for historic trusts settled by former non‑domiciled individuals.
BUSINESS-RELATED
E-invoicing
From April 2029 the Government will require all VAT invoices to be issued in a specified electronic format.
Increases to Corporation Tax late filing penalties
From 1 April 2026 the Government will double the penalty for taxpayers submitting a Corporation Tax return late. This will be legislated for in Finance Bill 2025-26.
Low Value Imports
From March 2029 the Government is removing the customs duty relief on goods imported into the UK valued at £135 or less, making them subject to customs duty at the latest, and consulting on implementing a new set of customs arrangements for these goods.
OTHERS
Enhancing tax transparency on real estate – The UK intends to participate in a new international agreement which will tackle tax evasion by providing for the automatic exchange of readily available information on real estate from 2029 or 2030.
ISA Reform – From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000. Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031. Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year.
Non-reimbursed Homeworking Expenses: Remove the tax relief available from 6 April 2026.
Electric Vehicle Excise Duty (eVED): Introduce a new mileage supplement for electric and plug-in hybrid cars from 1 April 2028.
Enterprise Management Incentives (EMI): Increase eligibility to allow scale-ups, as well as start-ups, to access the scheme from 6 April 2026. The Government will increase the employee limit to 500, the gross assets test to £120 million, and the company share option limit to £6 million from April 2026. The maximum holding period will increase to 15 years including in respect of existing EMI contracts. This will be legislated in the Finance Bill 2025-26. The EMI notification requirement will also be removed from April 2027. This will be legislated in Finance Bill 2026-27.
Venture Capital Schemes: Increase the Venture Capital Trust (VCT) scheme and the Enterprise Investment Scheme (EIS) annual and lifetime investment limits and the gross assets test from 6 April 2026. The Government will increase the VCT and EIS company investment limit to £10 million, and £20 million for Knowledge Intensive Companies (KICs) and increase the lifetime company investment limit to £24 million, and £40 million for KICs. The gross assets test will increase to £30 million before share issue, and £35 million after, from April 2026. Alongside this, the VCT income tax relief will decrease to 20%. These changes will be legislated in Finance Bill 2025-26.
Venture Capital Schemes: Reduce the VCT scheme Income Tax relief from 6 April 2026.
Writing-down Allowances (type of capital allowances): The Government will introduce a new 40% First-Year Allowance for main rate expenditure – including most expenditure on assets for leasing and expenditure by unincorporated businesses – from 1 January 2026. From 1 April 2026 for Corporation Tax and 6 April for Income Tax, main rate writing-down allowances will reduce from 18% to 14%.
Agricultural Property Relief and Business Property Relief: Allow any unused allowance for the 100% rate of relief to be transferable between spouses and civil partners from 6 April 2026.
Voluntary National Insurance: From 6 April 2026, the Government will remove access to pay voluntary Class 2 NICs abroad and increase the initial residency or contributions requirement to pay voluntary NICs outside of the UK to 10 years.
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