Budget 2025: Essential Takeaways for Individuals and Businesses
The 2025 UK Budget introduces significant tax changes that could impact your financial plans. Whether you are managing personal tax, running a business, or planning for inheritance and wealth management, staying informed is crucial. At Surrey Hills Tax, we provide tailored tax services and expert guidance to help you navigate these changes and plan with confidence.
Impact on Income Tax and National Insurance
Income tax and National Insurance thresholds will be frozen for three years starting in 2028, continuing a policy introduced by the previous government. Over time, this could push more individuals into higher tax brackets, increasing their overall tax burden.
Chancellor Reeves has acknowledged the effect on working people but emphasised that broader tax revisions aim to ensure the wealthiest contribute their fair share. While headline rates of income tax, VAT, and National Insurance remain unchanged, the three-year freeze is widely regarded as the budget’s biggest stealth tax, incrementally raising revenue without changing headline rates.
Higher Taxes on Savings, Property, and Dividends
The Budget introduces measures to increase taxes on savings, rental property, and dividends, aiming to balance the tax system and narrow the gap between income from work and income from assets.
Savings and Rental Income (from April 2027):
Basic-rate: 22%
Higher-rate: 42%
Additional-rate: 47%
Dividends (from April 2027):
Ordinary rate: 8.75% → 10.75%
Upper rate: 33.75% → 35.75%
These changes make owning income-producing assets more costly and highlight the need for careful financial planning.
Pension Salary Sacrifice
From April 2029, a £2,000 annual cap will be introduced on the amount employees can contribute to their pension via salary sacrifice while still benefiting from National Insurance exemptions. Any contributions above this cap will be taxed in the same manner as standard employee pension contributions.
ISA Changes
From 6 April 2027, the annual ISA cash limit will be reduced from £20,000 to £12,000.
To support first-time homebuyers, the government plans to publish a consultation in early 2026 on a new, simpler ISA product designed to help people get onto the property ladder.
Inheritance Tax Update
Key inheritance tax thresholds will remain frozen until 5 April 2031:
£325,000 inheritance nil-rate band
£175,000 residence nil-rate band
£1 million combined allowance for 100% Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026
The £1 million APR/BPR allowance will be transferable between spouses and civil partners, providing greater flexibility in estate planning.
Business Tax Update
Changes to capital allowances from 2026 include:
40% first-year capital allowance from 1 January 2026 for accelerated relief on qualifying investments
Reduction of the main writing down allowance from 18% to 14% (corporation tax from 1 April 2026)
Extension of 100% first-year allowances for zero-emission cars and electric vehicle charge-points until 31 March 2027
These measures are designed to incentivise business investment and support growth.
High-Value Council Tax Surcharge (HVCTS) Coming in 2028
From 1 April 2028, owners of domestic properties in England valued at £2 million or more will pay a High-Value Council Tax Surcharge, ranging from £2,500 to £7,500 per year, uprated annually by the Consumer Price Index (CPI). This aims to generate additional revenue from high-value homes.
Contact Us | Expert Tax Advisors in Surrey
At Surrey Hills Tax, we help individuals, families, and businesses navigate complex tax changes with precision and care. If you want to understand how the 2025 Budget could affect your finances, contact us today for a personalised consultation. Our expert team provides tailored tax planning, inheritance tax advice, and wealth management solutions, ensuring your financial future is secure.
Get in touch:
📧 hello@surreyhillstax.co.uk
📞 01483 970 410