UK Autumn Budget 2025 at a Glance
Nine major changes from the UK Autumn Budget 2025, covering income tax, pensions, ISAs, inheritance tax, Making Tax Digital, and more. Essential reading for expatriates.
The UK Autumn Budget 2025 announced a range of tax changes with significant implications for expatriates. Here are the nine most important measures.
1. Income Tax and National Insurance
No increases to the headline income tax rates or National Insurance contributions. The Chancellor confirmed that the income tax threshold freeze, holding the personal allowance at £12,570 and the higher rate threshold at £50,270, will continue until April 2028. The freeze delivers a real-terms tax increase as earnings rise with inflation.
2. Pension Salary Sacrifice
The government announced a consultation on restricting pension salary sacrifice arrangements for higher earners. No immediate changes were legislated, but employers and employees should monitor developments. Salary sacrifice through pension contributions remains tax-efficient for the time being.
3. ISA Restructuring
A new "British ISA" concept that had been trailed earlier in the year was not adopted. The overall ISA annual limit remains at £20,000. The government confirmed a review of the ISA regime with a view to simplification, but no concrete changes were announced for 2025/26.
4. Mansion Tax for £2M+ Properties
The Autumn Budget introduced a new council tax premium for residential properties valued above £2 million in England, effective from April 2026. This creates a higher annual council tax liability for owners of high-value properties, regardless of their income or tax residence status.
5. Inheritance Tax, Business and Agricultural Property Relief
From April 2027, Business Property Relief (BPR) and Agricultural Property Relief (APR) will be reformed. The 100% relief will be capped at a combined value of £1 million per person. Assets above this threshold will attract a 50% relief (an effective IHT rate of 20%) rather than full exemption.
This is a significant change for individuals with business assets or farmland in their estate, many of whom had historically relied on full BPR or APR to shield these assets from IHT.
6. Class 2 National Insurance, Abolition Deferred
The planned abolition of Class 2 National Insurance contributions (payable by self-employed individuals with profits below the small profits threshold) was deferred to a future date. Class 2 NICs remain payable at the current rate for 2025/26 and 2026/27.
7. VCT and EIS Relief Reduction
The government announced a reduction in the income tax relief available under the Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) programmes, effective from April 2026. VCT relief will reduce from 30% to 25%; EIS front-end income tax relief will reduce from 30% to 25%.
For expatriates with UK EIS or VCT investments, this reduces the attractiveness of new subscriptions.
8. Temporary Non-Residence, Extended Tail
The government announced that the temporary non-residence (TNR) rules, which bring certain income and gains into UK charge when a UK resident returns after a period of non-UK residence, will be extended. The anti-avoidance period increases from five to seven years. Expatriates planning to return to the UK should model the impact of the extended TNR period.
9. Making Tax Digital Expansion
MTD for Income Tax Self Assessment (ITSA) will be extended to self-employed individuals and landlords with qualifying income above £30,000 from April 2027 (in addition to those above £50,000 from April 2026), and to those above £20,000 from April 2028. This represents a significant expansion of the MTD regime over the coming years.
The Autumn Budget 2025 continues a trend of incremental tightening of the tax base, particularly for higher earners, business owners, and those with investment assets. Expatriates affected by these changes should review their position with a specialist adviser. Please contact Expat UK Tax to discuss the implications for your circumstances.
