Key Tax Measures from the Autumn Budget
- Income Tax Thresholds Frozen Until 2030/31
The Government has extended the freeze on key income-tax thresholds for a further three years, including the Personal Allowance, Higher-Rate Threshold, and Additional-Rate Threshold. As earnings rise with inflation, more individuals will be pulled into higher tax bands (“fiscal drag”).
- Pension Salary-Sacrifice Changes
From April 2029, employer pension contributions made under salary-sacrifice will retain their National Insurance (NI) advantage only on the first £2,000 per year. Contributions above this will be subject to NI, reducing the efficiency of salary-sacrifice arrangements.
- Increases in Taxes on Dividends, Savings & Property Income
A package of measures increases taxation on dividends, savings interest and rental income, with a 2% increase in tax. Owner-managed businesses, landlords and investors may see reduced net returns as a result of this.
- High-Value Property Tax Measures
A new property levy applies to homes valued above £2 million, introduced through a council tax surcharge or revalued bands. This will affect homeowners and property investors with high-value properties. £2,500 on property worth over £2 million and £7,500 on property worth over £5 million.
- Overall Tax Burden Reaches Historic High
The combined effect of today’s measures is projected to raise approximately £26 billion per year by 2029/30, pushing the UK tax burden to a record level.
- Electric and Hybrid Car Levy
The government have introduced a new levy on electric cars of 3p per mile and 1.5p per mile for hybrid cars, from April 2028.
Recommended actions for clients:
- Consider your pension and remuneration arrangements from dividends.
- Consider the tax implication on saving and/or rental income.
- Assess exposure to new high-value property levies.
- Plan ahead for fiscal drag as salary and income growth may push you into higher tax bands.