The Budget 2025.
The Chancellor delivered a number of announcements that will affect individuals and businesses across the country and included tax rises worth £26bn for the government.
Embarrassingly, the OBR report was published online, almost two hours ahead of the budget creating the wrong kind of headlines for the Chancellor. The budget aligns with her ambition to meet her fiscal rules in 2030. She stated that “Everyone will have to make a contribution” to cut government borrowing, to invest in the NHS and to bring children out of poverty. No austerity and reckless borrowing from the government, however will the measures announced help support businesses and their plans for growth and economic success?
Key Budget 2025 Announcements include:
- Personal tax and National Insurance contributions: the rates and thresholds are frozen for three more years, until the end of the 2030/31 financial year.
- National Insurance on salary-sacrificed pensions: A £2,000 cap on salary sacrifice into a pension, with contributions above that being subject to employee and employer National Insurance contributions. This will apply from April 2029.
- Increasing the tax rates on dividends, property and savings income by 2 percent.
- Electric vehicles: A new electric vehicle excise duty announced as a charge based on mileage, for battery electric and plug-in hybrid cars from April 2028. Payable each year alongside vehicle excise duty at 3p per mile for electric cars and 1.5p per mile for plug-in hybrids.
- Gambling Taxes increased: Remote Gaming Duty will rise from 21% to 40%. Duty on online betting will increase from 15% to 25%. No changes have been made to in-person gambling or horse-racing. Bingo Duty is also being entirely abolished from April 2026.
- Capital Gains Tax Relief: the relief for disposals of a business to an employee ownership trust is being reduced from 100% to 50% with immediate effect. This relief allowed a business owner to sell their business to a trust with zero capital gains tax, but the tax rate will now be 7% on the first £1 million of sale proceeds (until April 2026) and 12% on the excess over £1 million.
- A new ‘Mansion tax’: A council tax surcharge on properties worth over £2 million. Homeowners will pay £2,500 for properties worth more than £2m and £7,500 for properties worth more than £5m. This will apply from April 2028.
- Fuel duty: Fuel duty frozen at 5p until September 2026.
- Reform to cash ISA’s: £20,000 allowance stands, however £8,000 of this will now be for investment purposes, rather than for cash ISA’s. (Over 65’s will keep the full cash allowance of £20,000) From April 2027.
- National Minimum Wage and National Living Wage to increase from April 2026
- Two-child benefit limit scrapped from April 2026.
- Lower business rates to come for 750,000 retail, hospitality and leisure properties.
- Business Tax: A new first year capital allowance rate of 40% for new assets. The effect of this may be limited for small and medium sized businesses as the 100% tax deduction for the first £1 million under the Annual Investment Allowance rules will continue.
We will publish and share further analysis on the budget from experts in our tax team after they have studied the details announced today and the supporting documents for the Budget 2025.
If you have any questions relating to the content of today’s budget and how it could affect you or your business, please contact us.
