UK AUTUMN BUDGET 2025

ASESA Solutions Ltd - UK AUTUMN BUDGET 2025

The UK Government announced the Autumn Budget 2025 on 26 November, outlining a range of measures aimed at supporting public finances, encouraging long-term growth and adjusting the tax system to meet future economic pressures. Many of these changes are scheduled to take effect from April 2026, and several will directly impact individuals, company directors and business owners. Below, we have highlighted two of the most significant measures introduced in this year’s Budget.

1. Extension of the Income Tax & NIC Threshold Freeze to April 2031

The government has extended the freeze on personal Income Tax and National Insurance thresholds until April 2031, beyond the current deadline of April 2028. As incomes rise over time while thresholds stay fixed, more income becomes taxable or moves into a higher tax band.

Example: If someone earning £35,000 receives pay rises over time while thresholds stay frozen, more of their income is taxed. For instance, an increase to around £50,000 could push part of their earnings into the higher-rate band, resulting in a higher tax bill even though tax rates have not changed.

2. Increase in Dividend Tax Rates from April 2026

From 6 April 2026, dividend tax rates will rise by 2 percentage points for basic-rate and higher-rate taxpayers. The additional rate will remain unchanged. The £500 annual dividend allowance will continue to apply before these rates take effect.

• Basic rate: from 8.75% to 10.75%

• Higher rate: from 33.75% to 35.75%

• Additional rate remains 39.35%

  
  

Example: A director receiving £10,000 in dividends will have £500 tax-free and £9,500 taxable.

• At the current 8.75% basic rate, the tax is £831.25.

• From April 2026, at the new 10.75% rate, the tax increases to £1,021.25 — an additional £190.

Conclusion

These two measures represent only part of the key changes announced in the Autumn Budget 2025. In our next newsletter, we will look at two more significant updates to help you understand how the Budget may affect you and your business.