In this Budget Blog we are pleased to share the updates announced on 26th November 2025 and our thoughts on actions you may like to consider: 

Income Tax 

  • Personal tax thresholds remain frozen until April 2028. 
  • No change to the standard rates of income tax. 
  • Tax rates on property income (including rental income) will rise by 2 percentage points from April 2027, with new rates of 22%, 42% and 47% 

You may wish to review your income and consider tax-efficient strategies such as salary sacrifice or pensions to mitigate this effect.   

The increase in property income tax from April 2027 means landlords should plan for higher tax bills on rental income. It may be prudent to review rental pricing, allowable deductions, and timing of income recognition. 

Making Tax Digital (MTD) deadlines have been confirmed as final.  We are now less than 6 months away from this deadline for sole traders and landlords with income over £50,000, so please get in touch with us as soon as possible to ensure compliance.  

Savings 

  • From April 2027, the cash ISA allowance for under-65s will be reduced to £12,000. 
  • The overall ISA limit remains £20,000, meaning the remaining allowance can still be used in Stocks & Shares ISAs or Lifetime ISAs, both of which remain unchanged. 
  • Over-65s retain the full £20,000 cash ISA allowance. 

The reduction in the cash ISA allowance for under 65s may encourage you to consider a Stocks & Shares ISA, or Lifetime ISA to make full use of the £20,000 annual limit. 

  • Savings income tax rates will also rise by 2 percentage points from April 2027, to 22%, 42% and 47% 

This further underscores the importance of tax-efficient savings planning.  If you need any assistance with this please do let us know and we can pass you onto a Financial Adviser who can assist with savings planning. 

Dividends 

  • From April 2026, the following dividend tax increases apply: 
  • Basic rate: 8.75% → 10.75% 
  • Higher rate: 33.75% → 35.75% 
  • Additional rate remains unchanged at 39.35% 
  • The dividend allowance remains at £500. 

Planning options include ISA’s, pensions or deferring dividends where possible reduce tax exposure.  Please consider also timing of dividends prior to the increase in dividend tax in April 2026. 

National Insurance 

  • No changes to employee or employer National Insurance rates. 

This means business owners and employees can continue with existing payroll planning. 

Corporation Tax 

  • No change to existing Corporation Tax rates. 
  • The full expensing regime continues, allowing companies to deduct 100% of qualifying plant and machinery expenditure. 

Please consider the timing of capital expenditure decisions to maximise deductions.  

Capital Gains Tax 

  • CGT relief on business sales to Employee Ownership Trusts will be reduced from 100% to 50%. 
  • The annual CGT exemption remains at £3,000. 

Clients with significant capital gains may need to plan asset sales strategically, including spreading sales over 2 tax years if possible. 

Inheritance Tax 

  • No changes.

VAT 

  • No changes to VAT rates. 
  • VAT registration threshold remains at £90,000. 

Pensions 

  • From April 2029, a cap of £2,000 per year will apply to pension salary sacrifice arrangements. Contributions above this will be treated in the same way as standard employee pension contributions (subject to income tax and NIC). 

Early planning is advised to maximise pension contributions before the cap applies. If you need any assistance with this please do let us know and we can pass you onto a Financial Adviser who can assist with pension planning. 

Property: High-Value Property Charge 

  • An annual charge will apply to properties valued over £2 million, set at £2,500, rising to £7,500 for properties valued over £5 million. 
  • This will be based on self-assessed property value, and owners will need to make an annual declaration. 

Please factor this into cashflow and succession planning.  Early valuation and planning can mitigate unexpected tax liabilities. 

Other Measures 

  • National Minimum Wage (18–20): increases from £10.00 to £10.85 
  • National Living Wage: increases from £12.21 to £12.71 
  • Fuel duty remains frozen, including the continuation of the temporary 5p per litre cut 
  • New excise duty on electric cars, payable alongside vehicle excise duty, at 3pper mile for electric cars and 1.5p for plug in hybrids (from April 2028)
  • Ride-hailing services (e.g., Uber, Bolt) will be subject to VAT from April 2026, applied at the operator level 
  • Two-child benefit cap to be removed from April 2026 
  • Business rates relief: eligible retail, hospitality and leisure businesses continue to receive 40% relief, capped at £110,000 per business 
  • State pension uprating: increases of £440 (basic) and £575 (new state pension) 
  • Student loan repayment threshold frozen for three years from April 2026 
  • Rail fares frozen for 2026/27 
  • Help to Save becomes permanent, remaining available to those on Universal Credit or Working Tax Credit, with the 50% government bonus retained 
  • Prescription charges frozen at £9.90 for 2026/27 

Contact Bells Accountants

Contact blogs

Summary 

  • Many thresholds and allowances are frozen, while selective tax rates are increasing, particularly for property, dividends, and savings income. Clients with rental properties, significant investment portfolios, or high cash savings may face higher tax burdens in the coming years. 
  • Proactive tax planning is now critical: strategies could include maximizing ISA and pension contributions, reviewing property holdings, and timing income or capital gains. 
  • The changes create opportunities for long-term planning, particularly for retirement, succession, and investment strategies. Reviewing your financial position annually will ensure you remain tax-efficient and prepared for upcoming changes. 

If we can help you with any of the above points please do get in touch with our team at Bells Accountants. Contact us on 0208 850 0070 or .