Rachel Reeves delivered her 2025 Budget on 26 November, though the spotlight was briefly pulled elsewhere when the OBR's Budget Impact statements were published online around 45 minutes before the Chancellor took centre stage.
Whether it was this early leak or the increasingly tense political climate, the Commons' reaction felt particularly charged compared with previous Budgets.
Opening her statement, the Chancellor highlighted several areas of improved economic performance, including upgraded UK growth forecasts (1.5% for 2025, up from 1% in March), rising real wages, recent trade agreements with the US, India and the EU, and the recent fall in interest rates.
This year's Budget reinforces the Government's economic and fiscal strategy, with a focus on:
- Driving economic growth
- Reducing borrowing and strengthening fiscal resilience
- Protecting and supporting the NHS and wider public services
- Making the tax system “fairer”
Below is a summary of the headline tax changes announced:
Personal Tax
- Income Tax and National Insurance thresholds will remain frozen for a further three years from 2028.
- No increases to the headline rates of Income Tax, VAT or National Insurance.
- Introduction of an investment income surcharge, increasing the basic and higher rates on dividend and savings income by two percentage points, and the basic, higher and additional rates of property income by two percentage points. The increase of dividend tax is set to take place from April 2026, whilst the increase of tax on property and savings income takes effect from April 2027.
- A new Property Wealth Tax is set to take place from April 2028:
- £2,500 annual surcharge for properties valued above £2m
- £7,500 for properties valued above £5m
Capital Gains Tax
- The CGT exemption for disposals to Employee Ownership Trusts will be reduced from 100% to 50% from 26 November 2025. This means that 50% of the gain on disposal to the trustees of an Employee Ownership Trust will be treated as the disposers chargeable gain for CGT purposes.
Pensions
- From 2029, a £2,000 cap on salary sacrifice pension contributions. Contributions over this amount will be taxed in line with standard employee pension contributions.
Electric Vehicles
- New EV duty from 6 April 2028:
- 3p per mile for electric vehicles
- 1.5p per mile for plug-in hybrids
- High value vehicle tax threshold for EVs to increase to cars priced above £50,000.
ISA Reform
Effective from 6 April 2027:
- Annual Cash ISA limit reduced to £12,000 (from £20,000).
- Investors can still contribute up to £20,000 into Stocks & Shares ISAs – but at least £8,000 must be invested in UK assets.
- A £20,000 Cash ISA allowance will remain for over-65s.
Fuel Duty
- Fuel duty frozen again, now extended until September 2026.
Business Taxes
- Expansion of entrepreneurial investment schemes.
- Relief for UK stock market listings, including a new three-year Stamp Duty exemption for newly listed companies after 27th November 2025.
- No change to Corporation Tax rates, but introduction of a 40% allowance enabling businesses to write off more upfront investment costs.
A more comprehensive Budget review can be found by clicking here.
Please contact a Champion advisor on 0161 703 2549 if you have any immediate questions or queries surrounding the Budget.
Kind regards,
Champion Contractors