Rachel Reeves announced the details of her second Budget as chancellor today, 26th November 2025, highlighting key points relevant to both businesses and individuals.
- National Insurance and income tax thresholds will be frozen from 2028 to 2031, gradually pushing more people into higher tax brackets over time.
- Cash ISAs (Individual Savings Accounts) will be capped at £12,000 per year, with an £8,000 annual allowance set aside for ISA investments. This applies to those under the age of 65, while the current £20,000 allowance will stay the same for those aged 65 and over..
- Basic and higher income tax rates on property and savings will rise by 2%, while no National Insurance will be applied. The government has created a separate tax for properties and savings, these updated tax rates will take effect starting April 2027.
- Basic rate from 20% to 22%
- Higher rate 40% to 42%%
- Dividend Tax basic rate 8.75% to 10.75% and Dividend higher rate 33.75% to 35.75% from April 2026.The additional rate of 39.35% remain unchanged.
- Legal minimum wage for over-21s will increase from £12.21 to £12.71 per hour in April 2026.
- For 18 to 20-year-olds, from £10 to £10.85 per hour, as part of a plan to establish a single rate for all adults.
- Salary sacrifice scheme – From 2029, the amount people can sacrifice from their salary to avoid paying National Insurance on pension contributions will be capped at £2,000 a year.
- Properties worth more than £2m will be subject to council tax surcharge from £2500.
- A new mileage-based tax for electric vehicles and plug-in hybrid cars to be introduced from 2028 as £3p per mile.
- No changes to VAT threshold.
- Student loan repayment rate frozen till 2027.
- The Inheritance Tax nil-rate band, residence nil-rate band and residence nil-rate band taper will be fixed at their current levels for the tax years up to and including 2030 to 2031.
- The combined £1 million allowance for 100% Agricultural Property Relief and Business Property Relief will be fixed for the tax years up to and including 2030 to 2031.
- Capital Gains Tax on Employee Ownership Trust-From 26 November 2025, 50% of the gain on disposal to the trustees of an Employee Ownership Trust will be treated as the disposer’s chargeable gain for CGT purposes instead of 100%. From 6 April 2026 individuals, partnerships or trustees will need to make a claim for incorporation relief for Capital Gains Tax in their Self Assessment return.
- Companies who do not file returns at the required time for Corporation Tax (CT) will incur higher penalty charges.
- Tax relief for homeworking expenses abolished unless reimbursed by the employer.
Detailed Information on the Budget announced can be found in the CP 1439 – Office for Budget Responsibility – Economic and fiscal outlook – November 2025 page on GOV.UK
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