Personal Tax Updates - Autumn Budget 2025

Written by Tervel Mihaylov | Dec 13, 2025 9:59:58 AM

Personal Tax Updates - Autumn Budget 2025

English Version

Major Personal Tax Changes Announced by HMRC

The Autumn Budget 2025 brings significant changes to personal taxation that will affect millions of taxpayers across the UK. Understanding these changes is crucial for effective tax planning and protecting your wealth.

  1. Income Tax Thresholds Frozen Until 2031

The Impact:

  • Personal allowance frozen at £12,570
  • Basic rate threshold frozen at £50,270
  • Additional rate threshold frozen at £125,140

This three-year extension (until 2030-31) means "fiscal drag" will pull approximately 1 million more people into paying tax. With the state pension currently at £12,000 and rising, it's creeping dangerously close to the basic rate band.

What this means for you: Even without a pay rise, you'll be paying more tax each year as inflation erodes the value of these frozen thresholds.

  1. New Tax Rates for Different Income Types

The government is tackling the disparity between earned and unearned income with targeted rate increases:

Property Income (from 6 April 2027):

  • Basic rate: 22% (up from 20%)
  • Higher rate: 42% (up from 40%)
  • Additional rate: 47% (up from 45%)
  • Mortgage interest relief restricted to 22%

Savings Income (from 6 April 2027):

  • Basic rate: 22% (up from 20%)
  • Higher rate: 42% (up from 40%)
  • Additional rate: 47% (up from 45%)

Dividend Income (from 6 April 2026):

  • Ordinary rate: 10.75% (up from 8.75%)
  • Upper rate: 35.75% (up from 33.75%)
  • Additional rate: 39.35% (unchanged)
  1. Personal Allowance Ordering Rules Changed

From April 2027, your personal allowance will be deducted against employment, trading, or pension income first, before being applied to property, savings, or dividend income. This change ensures those with higher-taxed income types pay more.

  1. ISA Changes

From 6 April 2027:

  • Cash ISA annual limit reduced to £12,000 (for savers under 65)
  • Additional £8,000 available for stocks and shares ISAs
  • Total ISA allowance remains £20,000
  • Lifetime ISA limit: £4,000
  • Junior ISA limit: £9,000
  1. Winter Fuel Payment Charge

From 2025-26:

  • Pensioners with total income over £35,000 will face an automatic charge equivalent to their winter fuel payment
  • Collected via PAYE or self-assessment
  • Exemptions for those receiving income support, pension credit, or universal credit
  1. National Insurance Contributions

Thresholds frozen until 2031:

  • Primary threshold: £12,570
  • Upper earnings limit: £50,270
  • Secondary threshold: £5,000
  • Lower earnings limit: £6,708 (£129 per week)

Voluntary Contributions Changes (from 6 April 2026):

  • Class 2 voluntary NICs cannot be paid from abroad
  • Class 3 initial residency requirement increased from 3 to 10 years
  • Weekly Class 2 rate: £3.65
  • Weekly Class 3 rate: £18.40
  1. Salary Sacrifice Pension Restrictions

From April 2029:

  • Pension contributions above £2,000 per annum via salary sacrifice will be subject to both employer's and employee's NICs
  • Tax treatment remains unchanged
  • Standard employer pension contributions remain exempt

Important note: The OBR estimates employers will pass on 76% of increased NIC costs to employees through reduced future pension contributions or lower salaries.

  1. Non-UK Residents Tax Changes

From 6 April 2026:

  • Notional tax credit on dividends abolished for non-UK residents
  • Temporary non-resident rules amended - distributions from post-departure trade profits will be chargeable to UK income tax
  • Minor amendments to foreign income and gains regime
  1. Residence-Based Tax Regime Updates

The new residence-based regime (replacing domicile) continues with technical amendments to ensure it operates as intended, including:

  • Foreign income and gains relief
  • Overseas workday relief
  • Temporary repatriation facility
  1. Gift Aid and Charitable Donations

Charities continue to receive Gift Aid at the main basic rate (20%), and donors remain entitled to relief at main higher (40%) and additional (45%) rates.

  1. High Value Council Tax Surcharge

From April 2028: A new annual charge on property owners (not occupiers) for homes valued at £2m+:

  • £2m - £2.5m: £2,500
  • £2.5m - £3.5m: £3,500
  • £3.5m - £5m: £5,000
  • £5m+: £7,500

This is in addition to existing council tax and will be based on 2026 valuations by the Valuation Office.

  1. Homeworking Expenses

From 6 April 2026:

  • Employees can no longer claim deductions for non-reimbursed homeworking expenses
  • Employer reimbursement exemption (up to £6 per week) remains
  • If your employer doesn't reimburse, you cannot claim the deduction
  1. Workplace Benefits Extended

From 6 April 2026: Income tax and NIC exemptions extended to cover employee reimbursements for:

  • Eye tests and necessary corrective appliances
  • Homeworking equipment
  • Flu vaccinations
  1. Image Rights Payments

From 6 April 2027: Image rights payments related to employment will be treated as earnings and subject to both income tax and Class 1 NICs (particularly affecting professional sportspersons).

  1. Internationally Mobile Employees

From 6 April 2026: The maximum proportion of earnings an employer can exclude from PAYE through a Globally Mobile Employee notification is limited to 30% (to align with Overseas Workday Relief limits under the FIG regime).

Don't Let These Changes Catch You Off Guard - TTAM Ltd Can Help

With these sweeping changes to personal taxation, proactive planning has never been more important. At TTAM Ltd, we specialize in helping individuals and families navigate complex tax landscapes while maximizing legitimate tax efficiencies.

How TTAM Ltd Can Protect Your Wealth:

Comprehensive Tax Planning - We'll analyze how these changes affect your specific situation ✅ ISA Optimization - Make the most of your allowances before they change ✅ Pension Strategy - Navigate the new salary sacrifice rules effectively ✅ Property Income Planning - Prepare for the 2027 rate increases ✅ Dividend Planning - Restructure investments ahead of 2026 changes ✅ NIC Optimization - Ensure you're not paying more than necessary ✅ Residence Planning - Expert advice on the new residence-based regime

Why Choose TTAM Ltd?

🎯 Personalized Service - We treat every client as an individual, not a number 🎯 Proactive Advice - We anticipate changes and plan ahead 🎯 Clear Communication - No jargon, just straightforward guidance 🎯 Cost-Effective Solutions - Smart planning that pays for itself 🎯 Year-Round Support - We're here whenever you need us

The Cost of Inaction is Higher Than Ever

With tax thresholds frozen and rates increasing across property, savings, and dividend income, doing nothing means paying thousands more in tax over the coming years. A basic rate taxpayer will pay almost £1,000 more per year by 2030-31, while higher rate taxpayers will pay £5,000 more - and that's before any pay increases!

Don't wait until January to think about your taxes.

Contact TTAM Ltd Today:

📧 Email: info@ttamltd.co.uk
📞 Phone: [Your Phone Number]
🌐 Website: www.ttamltd.co.uk
📍 Office: [Your Address]

Schedule your free initial consultation today and discover how much you could save.

TTAM Ltd - Smart Tax Planning for Your Secure Future


Personal Tax Updates - Autumn Budget 2025

English Version

Major Personal Tax Changes Announced by HMRC

The Autumn Budget 2025 brings significant changes to personal taxation that will affect millions of taxpayers across the UK. Understanding these changes is crucial for effective tax planning and protecting your wealth.

  1. Income Tax Thresholds Frozen Until 2031

The Impact:

  • Personal allowance frozen at £12,570
  • Basic rate threshold frozen at £50,270
  • Additional rate threshold frozen at £125,140

This three-year extension (until 2030-31) means "fiscal drag" will pull approximately 1 million more people into paying tax. With the state pension currently at £12,000 and rising, it's creeping dangerously close to the basic rate band.

What this means for you: Even without a pay rise, you'll be paying more tax each year as inflation erodes the value of these frozen thresholds.

  1. New Tax Rates for Different Income Types

The government is tackling the disparity between earned and unearned income with targeted rate increases:

Property Income (from 6 April 2027):

  • Basic rate: 22% (up from 20%)
  • Higher rate: 42% (up from 40%)
  • Additional rate: 47% (up from 45%)
  • Mortgage interest relief restricted to 22%

Savings Income (from 6 April 2027):

  • Basic rate: 22% (up from 20%)
  • Higher rate: 42% (up from 40%)
  • Additional rate: 47% (up from 45%)

Dividend Income (from 6 April 2026):

  • Ordinary rate: 10.75% (up from 8.75%)
  • Upper rate: 35.75% (up from 33.75%)
  • Additional rate: 39.35% (unchanged)
  1. Personal Allowance Ordering Rules Changed

From April 2027, your personal allowance will be deducted against employment, trading, or pension income first, before being applied to property, savings, or dividend income. This change ensures those with higher-taxed income types pay more.

  1. ISA Changes

From 6 April 2027:

  • Cash ISA annual limit reduced to £12,000 (for savers under 65)
  • Additional £8,000 available for stocks and shares ISAs
  • Total ISA allowance remains £20,000
  • Lifetime ISA limit: £4,000
  • Junior ISA limit: £9,000
  1. Winter Fuel Payment Charge

From 2025-26:

  • Pensioners with total income over £35,000 will face an automatic charge equivalent to their winter fuel payment
  • Collected via PAYE or self-assessment
  • Exemptions for those receiving income support, pension credit, or universal credit
  1. National Insurance Contributions

Thresholds frozen until 2031:

  • Primary threshold: £12,570
  • Upper earnings limit: £50,270
  • Secondary threshold: £5,000
  • Lower earnings limit: £6,708 (£129 per week)

Voluntary Contributions Changes (from 6 April 2026):

  • Class 2 voluntary NICs cannot be paid from abroad
  • Class 3 initial residency requirement increased from 3 to 10 years
  • Weekly Class 2 rate: £3.65
  • Weekly Class 3 rate: £18.40
  1. Salary Sacrifice Pension Restrictions

From April 2029:

  • Pension contributions above £2,000 per annum via salary sacrifice will be subject to both employer's and employee's NICs
  • Tax treatment remains unchanged
  • Standard employer pension contributions remain exempt

Important note: The OBR estimates employers will pass on 76% of increased NIC costs to employees through reduced future pension contributions or lower salaries.

  1. Non-UK Residents Tax Changes

From 6 April 2026:

  • Notional tax credit on dividends abolished for non-UK residents
  • Temporary non-resident rules amended - distributions from post-departure trade profits will be chargeable to UK income tax
  • Minor amendments to foreign income and gains regime
  1. Residence-Based Tax Regime Updates

The new residence-based regime (replacing domicile) continues with technical amendments to ensure it operates as intended, including:

  • Foreign income and gains relief
  • Overseas workday relief
  • Temporary repatriation facility
  1. Gift Aid and Charitable Donations

Charities continue to receive Gift Aid at the main basic rate (20%), and donors remain entitled to relief at main higher (40%) and additional (45%) rates.

  1. High Value Council Tax Surcharge

From April 2028: A new annual charge on property owners (not occupiers) for homes valued at £2m+:

  • £2m - £2.5m: £2,500
  • £2.5m - £3.5m: £3,500
  • £3.5m - £5m: £5,000
  • £5m+: £7,500

This is in addition to existing council tax and will be based on 2026 valuations by the Valuation Office.

  1. Homeworking Expenses

From 6 April 2026:

  • Employees can no longer claim deductions for non-reimbursed homeworking expenses
  • Employer reimbursement exemption (up to £6 per week) remains
  • If your employer doesn't reimburse, you cannot claim the deduction
  1. Workplace Benefits Extended

From 6 April 2026: Income tax and NIC exemptions extended to cover employee reimbursements for:

  • Eye tests and necessary corrective appliances
  • Homeworking equipment
  • Flu vaccinations
  1. Image Rights Payments

From 6 April 2027: Image rights payments related to employment will be treated as earnings and subject to both income tax and Class 1 NICs (particularly affecting professional sportspersons).

  1. Internationally Mobile Employees

From 6 April 2026: The maximum proportion of earnings an employer can exclude from PAYE through a Globally Mobile Employee notification is limited to 30% (to align with Overseas Workday Relief limits under the FIG regime).

Don't Let These Changes Catch You Off Guard - TTAM Ltd Can Help

With these sweeping changes to personal taxation, proactive planning has never been more important. At TTAM Ltd, we specialize in helping individuals and families navigate complex tax landscapes while maximizing legitimate tax efficiencies.

How TTAM Ltd Can Protect Your Wealth:

Comprehensive Tax Planning - We'll analyze how these changes affect your specific situation ✅ ISA Optimization - Make the most of your allowances before they change ✅ Pension Strategy - Navigate the new salary sacrifice rules effectively ✅ Property Income Planning - Prepare for the 2027 rate increases ✅ Dividend Planning - Restructure investments ahead of 2026 changes ✅ NIC Optimization - Ensure you're not paying more than necessary ✅ Residence Planning - Expert advice on the new residence-based regime

Why Choose TTAM Ltd?

🎯 Personalized Service - We treat every client as an individual, not a number 🎯 Proactive Advice - We anticipate changes and plan ahead 🎯 Clear Communication - No jargon, just straightforward guidance 🎯 Cost-Effective Solutions - Smart planning that pays for itself 🎯 Year-Round Support - We're here whenever you need us

The Cost of Inaction is Higher Than Ever

With tax thresholds frozen and rates increasing across property, savings, and dividend income, doing nothing means paying thousands more in tax over the coming years. A basic rate taxpayer will pay almost £1,000 more per year by 2030-31, while higher rate taxpayers will pay £5,000 more - and that's before any pay increases!

Don't wait until January to think about your taxes.

Contact TTAM Ltd Today:

📧 Email: info@ttamltd.co.uk
📞 Phone: [Your Phone Number]
🌐 Website: www.ttamltd.co.uk
📍 Office: [Your Address]

Schedule your free initial consultation today and discover how much you could save.

TTAM Ltd - Smart Tax Planning for Your Secure Future