Every year I think that the Budget can’t get any more farcical and then the next year rolls around and the government ups its game. This year was particularly pantomime-y - presumably because it is so late and we are in the festive period. The constant braying and shouting drives me mad - although with the OBR “accidentally” leaking the Budget report just before the Chancellor stood up meant that I probably could have skipped it this year. At least this time we didn’t have to listen to Jeremy Hunt’s “dad” jokes. 

I will try and break it down between personal & business taxes, so that you only have to read the bits that are relevant to you, unless you’re struggling with a particularly bad bout of insomnia, and then please feel free… 

Personal Taxes

Tax Thresholds & personal allowances

Quite unbelievably these have been frozen for another 3 years - taking us up to 9 years in total. (I like how they try to make it sound like a good thing “we’re freezing this” when in reality it’s costing tax payers more money). Reeves had previously announced that she would unfreeze them in 2028.

Personal Tax rates

Income tax rates on self-employed and employed income hasn’t been touched. I think the outcry to the various leaks changed her mind on the 1p addition - however - it isn’t such good news for savers, landlords and shareholders (that’s you if you take your income from your limited company via dividends). 

The tax rates are increasing to: 

Saving tax rates -  The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027.

Tax on dividend income will increase by 2% also. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75% from April 2026. However, the additional rate will remain unchanged at 39.35%, which is odd. But don’t worry! The £500 tax-free dividend allowance is staying…

There will be a new distinction for property tax rates - call me an old cynic (actually, just a cynic will do, thanks) but I suspect this will enable other taxes, such as NI to be collected on property income, while it sits in its own little pot. From April 2027, the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. 

Finance cost relief - the amount of mortgage interest relief we can claim - will be provided at the separate property basic rate (22%).

Note the different dates these changes come in - dividend changes are coming in straight away next year.

NI & VAT

A small reprieve here, in that NI hasn’t been changed or added to anything else and that the VAT % has stayed the same. Let’s face it, they were never going down, so the fact they are still the same is a bonus. 

The only note on NI is that if you live overseas, and pay voluntary NI, you will no longer be able to do this - although I am not sure what date this is being implemented. 

Student Loans

Apparently in the pursuit of fairness, the Plan 2 student loan repayment threshold remains frozen from 2027-28 until 2029-30. I have no idea why it is only Plan 2… 

ISAs

Although the Chancellor has maintained the £20,000 ISA allowance, for anyone under 65, you can only put £12,000 in a cash ISA, the rest has to be in a stocks and shares ISA. This change comes into effect in April 2027.

Electric Vehicles

The new “mileage-based charge” on battery electric and plug-in hybrid cars from April 2028, sounds like fun to administer.  The mileage-based charge is £0.03 (3p) per mile for battery electric cars and £0.015 (1.5p) for a hybrid. If this is a company car, I would expect this to be paid by the company, rather than the individual - this is just my assumption. 

Salary Sacrifice

This is going to be a massive pain to deal with in payroll schemes… which might be why we have a long run into this new rule, as it doesn’t get implemented until 2029. At the moment, employees can choose to “sacrifice” some of their salary and put it straight into a pension. The reward is that the element that is sacrificed does not attract NI. From April 2029, an employee will only get the NI benefit for contributions up to £2,000 per tax year. I’m sure IFAs will be up in arms about this, as it will discourage pension contributions among the employed. 

State pension & Simple Assessment

In April 2026 the state pension will rise by 4.8% in line with earnings growth, meaning pensioners will receive an extra £575 a year. Apparently the government will “ease the administrative burden for pensioners” whose only income is the basic, or new, State Pension, so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the State Pension exceeds the Personal Allowance from that point. I find it very hard to believe that they can achieve any kind of simplification based on recent history. More news on this to follow.

VCT relief

Although there was talk of improvement of investor tax reliefs, that is mainly going to be a benefit for large companies. However, it looks like the VCT income tax relief will decrease to 20% from April 2026.