On Wednesday, 26 November, Chancellor Rachel Reeves delivered the Autumn Budget 2025. Shaped by shifting economic conditions, a renewed focus on regional empowerment, and a series of tax and fiscal measures, the Budget is set to impact individuals and businesses across the UK.
The Chancellor opened with some encouraging news from the Office for Budget Responsibility (OBR), which now expects the UK economy to grow by 1.5% in 2025, which is a welcomed lift from the earlier 1% forecast. Inflation is also set to ease, with rates expected to fall to 2.5% next year and a further 0.4% reduction predicted in 2026.
Recognising the importance of supporting communities across the UK, the Budget also highlighted renewed investment in our regions. This includes £820m for Scotland, £505m for Wales, and £317m for Northern Ireland, helping local leaders drive improvements that will benefit businesses and families alike.
Below, we have focused on the key announcements most relevant to employers, business owners and individuals.
There will be no early end to the Energy Profits Levy, a decision that could have devastating consequences for our region.
Income tax and National Insurance thresholds will remain frozen until 2031, which may see more individuals move into higher tax bands as wages rise. While Scotland sets its own income tax rates, the National Insurance freeze will apply here as well.
The additional 2% on savings and dividends will apply in Scotland, but property income is subject to Scottish tax rates.
The £1m limit on Business Property Relief (BPR) and Agricultural Property Relief (APR) will now be transferable, meaning families can pass on more business or farming assets without paying inheritance tax.
Taking effect from April 2026, the National Living Wage and National Minimum Wage will be increasing by 50p to £12.71 per hour for over 21s. For those:
These changes highlight the importance of forward planning for employers, particularly those in hospitality, retail and care sectors. Our payroll experts are here to support you through these updates.
The Chancellor announced a new structure for ISAs. The overall £20,000 allowance remains, but only £12,000 may now be placed in cash ISAs. The remaining £8,000 must be invested in a stocks and shares ISA. However, savers aged over 65 may continue to use the full £20,000 allowance for cash ISAs.
From April 2029, National Insurance will be charged on salary-sacrifice pension contributions above £2,000 per year, which will also apply in Scotland.
While the Corporation Tax rates remain unchanged, there are changes to capital allowances, which mean it may take longer for businesses to obtain relief for capital spend.
Capital Gains Tax relief for employee ownership trusts will be reduced from 100% to 50%.
A new council tax surcharge will apply to high-value homes:
From 2028, electric and hybrid vehicle owners will face a new mileage-based charge of 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids. This comes in addition to the existing Vehicle Excise Duty. Fuel duty will remain frozen until September 2026.
The Chancellor confirmed an increase of £440 per year for the basic state pension and £575 per year for the new state pension.
While some announcements take effect across the UK, others apply only in England or reserved policy areas. Scotland’s own Budget will be delivered on 13 January 2026, and this will outline Scottish income tax bands, property tax changes and other devolved measures.
At Hall Morrice, we understand that tax and regulatory changes can feel complex, especially when they intersect with payroll, business planning, investment decisions and long-term financial strategy. Our team is here to help you interpret what these changes mean for you, your people and your business. If you would like tailored advice, please get in touch with us at tax@hall-morrice.co.uk.
