Chancellor of the Exchequer, Rachel Reeves, delivered the UK Budget on 26 November 2025.
Please see below details of the main upcoming changes that were announced.
- Personal tax rate increases
The Government is implementing a 2-percentage point increase across property, savings, and dividend income taxes.
From 6 April 2027, property income will be taxed at 22% basic, 42% higher, and 47% additional rates.
The relief for residential finance costs will be calculated at the new 22% property basic rate.
Dividend income rates rising to 10.75% (from 8.75%) and the upper rate to 35.75% (from 33.75%). Notably, the additional rate remains unchanged at 39.35%.
Savings income rates rise to 22%, 42%, and 47% across all tax bands.
The starting rate for savings and Personal Savings Allowance remains unchanged.
Please see the below summary table of tax rate changes.
| Income Type | Band | Current Rate | New Rate | Effective From |
| Employment/Self-Employment | Basic | 20% | 20% | No change |
| Employment/Self-Employment | Higher | 40% | 40% | No change |
| Employment/Self-Employment | Additional | 45% | 45% | No change |
| Property Income | Basic | 20% | 22% | Apr-27 |
| Property Income | Higher | 40% | 42% | Apr-27 |
| Property Income | Additional | 45% | 47% | Apr-27 |
| Dividend Income | Basic (Ordinary) | 8.75% | 10.75% | Apr-26 |
| Dividend Income | Higher (Upper) | 33.75% | 35.75% | Apr-26 |
| Dividend Income | Additional | 39.35% | 39.35% | No change |
| Savings Income | Basic | 20% | 22% | Apr-27 |
| Savings Income | Higher | 40% | 42% | Apr-27 |
| Savings Income | Additional | 45% | 47% | Apr-27 |
- Threshold freeze extends to April 2031
The income tax Personal Allowance (£12,570), Higher Rate Threshold (£50,270), and Additional Rate Threshold (£125,140) remain frozen until April 2031, which is a three-year extension beyond the previous April 2028 endpoint.
The NICs Secondary Threshold is also frozen at £5,000 until 2031.
- High Value Council Tax Surcharge
The High Value Council Tax Surcharge (The “Mansion Tax”) will apply for residential properties in England only, from April 2028.
The annual amounts will be based on the value of the residential property starting from £2m, as follows:
- £2m to £2.5m: £2,500 annually
- £2.5m to £3.5m: £3,500 annually
- £3.5m to £5m: £5,000 annually
- £5m and above: £7,500 annually
Valuations will be based on 2026 property prices as assessed by the Valuation Office Agency, with revaluations every five years. Charges will increase annually with CPI inflation. Local authorities will collect the revenue on behalf of central government, receiving full compensation for administrative costs.
The Treasury will consult in early 2026 on support, deferral options, and exemptions.
- Employee-Owned Trust CGT relief halved immediately
On or after 26 November 2025, the CGT exemption for qualifying disposals to Employee Ownership Trust trustees has been reduced from 100% to 50%.
Under the new rules, 50% of the capital gain will now become chargeable immediately while the remaining 50% is deferred until future disposal by EOT trustees. Critically, Business Asset Disposal Relief and Investors’ Relief are no longer available where the EOT relief has been claimed.
- Pension salary sacrifice capped at £2,000 from April 2029
From 6 April 2029, salary-sacrificed pension contributions exceeding £2,000 annually will attract both employer (15%) and employee National Insurance contributions.
Contributions made through salary sacrifice will still be exempt from income tax, subject to usual limits.
- Class 2 NIC access abolished for non-residents with new 10-year requirement
From 6 April 2026, non-UK residents will lose access to voluntary Class 2 NICs (currently £3.50/week) for periods abroad. Instead, they must pay the higher Class 3 rate (currently £17.75/week) and meet a new requirement of either 10 years continuous UK residence or 10 years of National Insurance contributions while in the UK, which is up from the previous 3-year threshold.
- APR and BPR allowance now transferable between spouses
In a significant change from the October 2024 Budget framework, from 6 April 2026 the £1 million 100% relief allowance for Agricultural Property Relief (APR) and Business Property Relief (BPR) is now transferable between spouses and civil partners from 6 April 2026. This applies even if the first death occurred before April 2026.
Married farming couples can now potentially pass on £2 million in qualifying agricultural/business assets at 100% relief, plus standard nil-rate and residence nil-rate bands—potentially up to £3 million IHT-free in optimal circumstances. The £1 million threshold remains frozen until April 2031.
- Cash ISA annual limit reduced to £12,000 for under-65s
From 6 April 2027, individuals under age 65 will have a reduced annual cash ISA contribution limit of £12,000 within the overall £20,000 ISA allowance.
Those aged 65 and over retain the full £20,000 cash ISA allowance.
Additionally, a consultation will launch in early 2026 on a new simpler ISA product for first-time buyers to replace the Lifetime ISA.
- Non-resident dividend tax credit abolished from April 2026
The notional 8.75% tax credit on UK dividends for non-UK residents will be repealed from 6 April 2026. This is to align the treatment for UK residents, whereby the credit remained available to non-residents after being abolished for UK residents.
