The early release of OBR forecast gave the game away!
After months of speculation, we now understand the Chancellor expects to raise £26 billion in tax take by 2029-30, thanks to the Budget released today.
Many of today’s announcements are not scheduled to come into force until 2027 at the very earliest. In terms of reforms that will be introduced immediately, the list is thankfully short, meaning we have time to consider and plan the best way to respond. After much kite flying this Summer, the Budget does not bring in widespread Capital Gains Tax rises or the wider wealth tax.
Below, we share a headline overview of some of the key announcements. We will share more detailed explanations very soon, including the practical implications for you, your family, and your business.
Income Tax and National Insurance Contributions thresholds
Both rates to be frozen until the end of 2030/31 to increase tax take by fiscal drag.
Pension Salary Sacrifice
Any salary sacrificed above the level of £2,000 will no longer be exempt from National Insurance Contributions from April 2029.
The proposed restrictions have not been extended to include cycle to work schemes or workplace nursery arrangements.
ISA’s
For under 65’s, there will be new rules regarding how individuals can allocate their ISA allowance. From April 2027:
- £12,000 Cash ISA limit (with the remaining up to £8,000 to be allocated to stocks and shares).
- Unchanged £20,000 Stock and Shares ISA limit.
Over 65’s will not be subject to these limitations and will retain the £20,000 allowance to invest up to all in a Cash ISA.
Property, savings and dividends
Dividends
The tax rate will be raised by 2% on the basic and higher rates on dividends from April 2026, with new rates being 10.75% and 35.75% respectively.
Property income tax and savings income tax
The Government has announced a 2% increase to the basic, higher, and additional bands from April 2027 for this type of income.
This will mean the new bands are as follows:
- Basic: 22%
- Higher: 42%
- Additional: 47%
Widening of EMI eligibility
The EMI eligibility criteria will be amended, to allow business to remain EMI qualifying for longer, on their growth journey. This is aimed at ensuring the UK is viewed as scale-up friendly.
The EMI size limits will double to 500 full-time employees and quadruple to £120m gross assets. The overall limit on value for shares under EMI option will double to £6m. The maximum holding period for EMI options will increase to 15 years. All of these changes apply from April 2026.
The requirement to report EMI option grants to HMRC will be scrapped from April 2027.
Enterprise Investment Scheme (EIS)
From 6 April 2026 the size of company that can raise funds under EIS, and the annual and lifetime amounts they can raise, will effectively double to the following:
- Gross assets: £30m before investment and £35m after.
- Annual investment limit: £10m (or £20m for a knowledge intensive company)
- Lifetime investment limit: £24m (or £40m for a knowledge intensive company)
Employee Ownership Trusts (EOT)
A reduction on the Capital Gains Tax relief on disposals to EOT’s from 100% to 50% from next month.
Gambling
Reforms to Gambling Tax will raise £1.1 billion. This figure is made up of several reforms to the taxation of the gambling industry, including the removal of Bingo Duty. The rate of Remote Gaming Duty (RGD) is being increased from 21% to 40%. General Betting Duty is being reformed by creating a carve-out for remote UK horseracing bets which will be taxed at the current 15% with other bets subject to GBD at 25%.
Low Value Import Relief
A consultation has been announced to consider the removal of the current Low Value Import Relief, which exempts from Customs Duties any consignment imported into the UK with a value of less than £135. This is aimed at countering perceived benefits to non-UK e-commerce retailers importing low value goods into the UK.
High Value Council Tax Surcharge
A new “mansion tax” on homes valued at above £2 million (to be valued next year). These funds will go directly to the Government, not to local councils as would normally be the case for Council Tax.
Fuel duty
Fuel duty to be frozen until next September.
Agricultural and Business Property Reliefs
Minor reforms to the Agricultural Property Relief (APR) and Business Property Relief (BPR) rules were announced last October and are due to come into force on 6 April 2026. The draft legislation will be amended to allow for the £1 million APR and BPR relief to be transferable between spouses.
Electric vehicles
From 2028/29, the Government will introduce a mileage charge for electric and plug-in hybrid vehicles, at the following rates:
- Electric vehicles – £0.03 per mile
- Plug-in hybrid vehicles – £0.015 per mile
National Minimum Wage
The National Minimum Wage has been lifted to the following, and will come into effect from April 2026:
- Age 18-20: £10.85 (up from £10 per hour)
- Age 21+: £12.71 (up from £12.21 per hour)
Tomorrow morning, we will share a deep dive that will cover these topics in greater detail. This will be shared in advance of our webinar, which will be led by a panel of tax experts and held online at 10am. Register below to join us.
