The Autumn Budget 2025 introduced a host of tax changes that will directly affect business owners, investors and limited companies across the UK.
Some changes open up new opportunities and others raise tax liabilities. What matters most is how these updates apply to you and what steps you take now to protect your business and personal finances.
Here’s what you need to know.
Dividend, property and savings income to be taxed more heavily
From April 6, 2026, dividend income will be taxed at a higher rate, with a 2% increase to the ordinary rate to 10.75% and the higher rate to 35.75%. The additional dividend rate remains at 39.35%. From April 6, 2027, the rates of tax charged on savings and property income will increase by 2% in each band to 22%, 42% and 47% respectively. These tax rises sit alongside the continued freeze on income tax thresholds, now locked in until 2031.
Key takeaway: for directors and shareholders who take dividend income, the result could be less in your pocket unless you take action. A review of your remuneration strategy is likely to be well worth your time.
Inheritance tax – Business Property Relief and Agricultural Property Relief
Last year the government announced that from April 6, 2026, the full 100% relief from Inheritance Tax will
be restricted to the fi rst £1m of combined agricultural and business property. Relief reduces to 50% above this limit resulting in eff ective 20% IHT above £1m. Despite concerns being raised the government are set to continue with this policy.
However, the government have now confirmed that the £1m allowance will be transferrable between spouses on death meaning a couple can benefit from 100% relief on up to £2m of qualifying assets. The transferable allowance is even available where an individual’s spouse passed away before April 6, 2026.
Key takeaway: The imposition of IHT on the value of businesses and farms is a big shift which could have an adverse impact. It is important planning is undertaken to mitigate exposure.
Inheritance Tax on pensions
The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes from April 6, 2027. Th is is another big shift and may result
in a very large increase in IHT exposure for individuals holding unused pension funds.
Tax relief halved on sales to Employee Ownership Trusts
Selling your business to an Employee Ownership Trust (EOT) has become a popular route for succession, due to the number of benefits EOTs off er. One of those benefits is the Capital Gains Tax relief it offers. That relief has now been halved from 100% to 50%.
Key takeaway: If an EOT has been part of your exit plan, it’s worth revisiting the numbers and timelines with a corporate finance adviser. The structure can still work well, but it may no longer be the most efficient route in every case.
EIS and EMI schemes extended
There was welcome news in the form of extended access to the Enterprise Investment Scheme (EIS) and Enterprise Management Incentives (EMI).
EIS allows investors to back qualifying companies with generous tax reliefs. EMI enables employers to offer share options to staff in a tax-efficient way.
Key takeaway: These schemes remain highly valuable, particularly for growing businesses looking to reward staff or attract outside investment. With more companies now eligible, it’s a good time to take a second look.
Capital allowances: faster relief, but with a catch
For expenditure incurred on or after January 1, 2026, businesses investing in plant or machinery will be able to claim a new 40% first-year allowance. Th is will mainly benefi t sole traders or partnerships who have utilised or are not eligible for the £1m annual investment allowance. Companies or groups with expenditure in excess of the £1m annual investment allowance continue to be entitled to full expensing.
However, the annual writing-down allowance for plant and machinery will fall from 18% to 14%, so long-term relief will be slower.
Key takeaway: Timing will be important. If you’re planning a major investment, it’s worth speaking to your accountant to make sure you maximise the benefit.
New ISA Rules for under 65s
From April 6, 2027, individuals under the age of 65 will only be able to contribute up to £12,000 a year into cash ISAs. The overall ISA allowance remains £20,000, but the new limit will restrict how much can be kept in cash. The remaining £8,000 will be designated for stocks and shares ISA investment.
Key takeaway: If you’re using ISAs as part of your long-term financial planning, it’s a good idea to review your ISA structure to ensure compliance from April 2027.
Next steps: what to review now
With so many Autumn Budget 2025 tax changes coming into eff ect over the next two years, early planning is essential. Here’s where to focus:
- Review how you take income, especially if you rely on dividends or rental income.
- Review your inheritance tax exposure particularly if you own assets of more than £325,000 or have an interest in a business.
- Revisit your exit strategy if you were considering an EOT.
- Time any major investments carefully to take advantage of enhanced reliefs.
Need help navigating the changes?
The tax system has grown more complicated, not less. At Hawsons, we work with business owners, directors, and investors every day to help them make confi dent decisions, minimise risk, and find the
most efficient route forward.
If you’d like to talk through how any of these changes may affect you, we’re always happy to help.
For more information contact Hawsons Chartered Accountants on 01604 645600, email
northampton@hawsons.co.uk or visit the website here
Tax Partner
Hawsons Chartered
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