Overall, working-class households are not significantly better off under this Budget. The
government kept major tax rates (income tax, National Insurance, and VAT) unchanged, but
The freeze on income tax thresholds until 2031 means millions of workers will quietly pay
more tax through “fiscal drag” as wages rise. Everyday costs such as alcohol, tobacco, and
Vape duties will also go up, and the expansion of the soft drinks levy will increase the price of
high-sugar drinks.
Student loan thresholds being frozen will also mean higher repayments for many younger
workers. While fuel duty remains frozen for now, it is only a temporary help. In short, nothing
in this Budget meaningfully improves the financial position of working-class households, and
several measures will likely make their disposable income tighter over time.
For business owners, the picture is mixed but slightly more favourable overall. Certain
sectors, especially hospitality, benefit from permanently lower business rates, funded by
higher costs placed on online warehouse operators. SMEs retain their exemption from
transfer-pricing rules, reducing administrative burdens. There is also a new 40% first-year
investment allowance starting in 2026, which preserves some incentive to invest even
though writing-down allowances are being cut. On the downside, dividend tax rises in 2026
and new, separate higher property-income tax rates from 2027 will increase the tax burden
for landlords and small company owners who take income through dividends or property.
Business owners relying heavily on salary sacrifice pension schemes will also face higher NI
costs.
Overall, working-class people are likely worse off, whereas business owners receive
mixed but somewhat more supportive measures, especially in hospitality and investment
incentives. However, owners who rely on dividends or property income will feel noticeable
tax increases.
Key Measures at a Glance
🔹 Taxes & Income
• No rise in income tax, NI, or VAT rates.
• Income tax thresholds frozen until 2031.
• Dividend tax up by 2% from 2026.
• Savings income tax increases by 2% from 2027.
• New separate tax rates for property income from 2027 (22%, 42%, 47%).
• Student loan repayment threshold frozen for 3 years.
🔹 Everyday Costs
• Fuel duty frozen until Sept 2026 (5p cut kept).
• Soft drinks levy expanded to include high-sugar milk drinks.
• Duties on tobacco, vaping, and alcohol rise with inflation.
• New tourist tax on overnight stays.
🔹 Vehicles & Transport
• Road tax for EVs: 3p per mile (1.5p for hybrids) from 2028/29, rising with inflation.
Autumn Budget 2025
🔹 Housing & Property
• New high-value property council tax surcharge on homes worth £2m+ from 2028.
• Lower CGT relief on disposals to Employee Ownership Trusts.
• Abolition of £135 low-value import relief from 2029.
🔹 Pensions & Savings
• 25% tax-free lump sum unchanged.
• Salary-sacrifice pension contributions above £2,000 to be subject to NI from 2029.
• ISA limit stays at £20k, but from 2027 at least £8k must be invested (not for over65s).
• Help to Save made permanent.
🔹 Business
• Lower business rates for hospitality funded by online warehouse charges.
• New first-year allowance (40%) for investment from 2026.
• SMEs keep their exemption from transfer pricing rules.
• EMI scheme expanded.
🔹 Other Measures
• Bingo duty abolished.
• Gambling taxes rise for remote gambling.
• Inherited blood compensation payments are exempt from IHT.
• New loan charge settlement option.
