Autumn Budget 2025: Personal tax takeaways

On Wednesday 26 November 2025, the Chancellor, Rachel Reeves, presented the much anticipated Autumn Budget. While policy papers continue to emerge, here are the key personal tax changes announced yesterday. 

Income tax rates and thresholds

• Income tax thresholds have been frozen until 2031.
• Separate tax rates are to be introduced for property income from April 2027. The property basic rate will be 22%, the higher rate 42%, and the property additional rate will be 47%.
• 2% increase to the basic and higher rates of dividend tax, increasing to 10.75% and 35.75% respectively, from April 2026. The additional rate will remain unchanged at 39.35%.
• 2% increase to the savings tax rates, so an increase to 22%, 42% and 47% respectively from April 2027.

Inheritance tax reliefs and allowances

• Inheritance tax nil rate bands will stay as they are until 2031.
• The forthcoming combined allowance for the 100% rate of agricultural property relief (APR) and business property relief (BPR) will be fixed at £1million for a further year until 5 April 2031.
• Any unused £1million allowance for the 100% APR and BPR will be transferable between spouses and civil partners. This will be legislated for in Finance Bill 2025-26 and take effect from 6 April 2026.  The Government appears not to have adopted any of the CenTax recommendations proposed this summer, so there have been no further changes to BPR as speculated.
• The Government will legislate to prevent Inheritance Tax avoidance through certain “loopholes”, including ensuring UK agricultural property held via non-UK entities is treated as UK-situated, addressing changes in the status of trust assets before an exit charge, and restricting charity exemptions to direct gifts to UK charities and clubs. This will be legislated for in the Finance Bill 2025-26 and will take effect for trust exit charges from 26 November 2025, gifts to charities in lifetime from 26 November 2025 or on a death from 6 April 2026, and for UK agricultural property from 6 April 2026.  

High value council tax surcharge (or the so-called “mansion tax”)

From April 2028, a new high value council tax surcharge will be introduced. Homeowners whose residential properties in England are valued at £2million or more (subject to revaluation every five years) will pay an annual surcharge of £2,500 rising to £7,500 for properties worth £5million or more (this is in addition to existing council tax). The proposed charging structure is outlined below:

According to the Budget 2025 policy paper and HM Treasury Guidance, the charge is to be levied on property owners rather than occupiers. The devil will be in the detail, but it is likely that “property owners” will be the freeholders, unless the property is let on a long lease. While the “surcharge” will be collected through the council tax framework, these payments will be passed on directly to the central government to fund local government services.